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NY pension 'reform' helped by deal with teachers' union

After state lawmakers created a new pension tier for the state's municipal employees on Wednesday, Gov. David A. Paterson and state legislative leaders dubbed it "landmark pension reform" that will save the state $48 billion over 30 years.

But what the lawmakers did not mention was that they agreed to vote on the measure only after Paterson assuaged the union that represents the state's teachers.

The "sweeteners," as the teachers' union chief called them, included setting teachers' retirement age at 57 - up from 55, but lower than the age 62 mark for other municipal employees - and guaranteeing retiree health benefits in perpetuity.

The deal also guarantees no layoffs for state employees for a year.

"We said there have to be some sweeteners in it, it has to be a sensible thing for teachers," said Alan Lubin, the executive vice president of New York State United Teachers, who said 80 percent of the state's teachers retire by age 58. New York has more than 216,000 elementary and secondary school teachers, according to the National Center for Educational Statistics.

The new pension Tier V, which applies to municipal employees in the state pension system, requires employees hired after Jan. 1 to contribute 3 percent of their annual salary to their pensions. New teachers will contribute 3.5 percent.

Current employees make no contribution and will not be affected. All New York City employees except teachers will be unaffected because their pensions are funded by the city, not the state.

While Albany Democratic leaders said this will save taxpayers $48 billion, E.J. McMahon, director of the Empire Center for New York State Policy, a conservative think tank, called the figure misleading.

"This figure they keep using, $50 billion in savings, that's over a 30-year period in which pension spending could exceed half a trillion dollars," McMahon said. "What he gave away for it was very, very substantial."

Lawrence Schwartz, Paterson's top aide, said the deal required negotiating incentives to get agreement from unions and lawmakers.

Because the guarantee for retired teachers' health benefits was included late in negotiations, the state budget office has not completed an estimate of its cost to taxpayers. Comptroller Thomas DiNapoli said Thursday that Tier V will "save taxpayers money," but that his office has yet to determine what the long- and short-term cost savings will be.

One sign the new pension tier may be less than the "landmark reform" Albany Democrats touted could be the lack of outrage from local union officials. Cheryl Felice, the president of the Suffolk County Association of Municipal Employees, said she didn't oppose the bill.

"Our goal was to make sure that pension monies of our current employees and members were not going to be negatively affected," she said.

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