Cuomo unveils plan to overhaul state pension system

Flanked by a dozen state legislators from Long Island at Babylon Town Hall Thursday, New York Attorney General Andrew Cuomo unveiled his plan to overhaul the state pension system, even as the state comptroller expressed concern that there could be constitutional problems with it.

Cuomo's proposal comes in the wake of a pay-to-play scandal in which government officials illegally steered state retirement fund business to investment firms that made political contributions. The attorney general's investigation, launched nearly three years ago, has had national reverberations and has ensnared high-profile political players, including Hank Morris, a political adviser to former State Comptroller Alan Hevesi.

To date, four people, including former Liberal Party chairman Ray Harding, have pleaded guilty to charges connected to the investigation, which is continuing. The case against Morris, formerly of Westbury, is pending. He has maintained his innocence.

"It's a corrupt system that has been managing these monies," Cuomo said.

The proposed legislation would impose stringent limits on political contributions, require extensive disclosures from investment fund personnel, create a code of conduct, compel any licensed professional to report conflicts of interest, and would bar investment firms from using placement agents or lobbyists to get business from the state pension fund.

One of the more significant proposals is to change oversight of New York's $120-billion pension fund - the state's single largest asset, Cuomo said - from the current system of sole trustee to a 13-member, bipartisan board of trustees. Currently, only three states - New York, Connecticut and North Carolina - have pension funds with a sole trustee.

It is that proposal that state Comptroller Thomas DiNapoli has questioned. In a statement, he said that while he thought most of Cuomo's proposals were a "good step toward reform," other issues needed to be resolved, including the constitutionality of installing a board of trustees.

Although the state constitution does not explicitly say the pension fund must be run by a sole trustee, some have argued that the constitutional rule that pension benefits cannot be diminished would be violated if a sole trustee were replaced with a board of trustees, DiNapoli spokesman Dennis Tompkins said.

Asked about that Thursday, Cuomo said his office believes the change to a board of trustees can be made through legislation and that he would work with DiNapoli.

The presence of so many state legislators, including Senate sponsors Brian X. Foley (D-Blue Point) and John Flanagan (R-East Northport), was significant, Foley said, as "support for [the bill's] passage has been growing."

Flanagan agreed, adding, "There should be integrity in the system."