Stupp: NY pensions need reform now

Herbert W. Stupp, an adjunct lecturer at Baruch College, was New York City commissioner on aging from 1994-2002. He was legislative assistant to state Sen. Fred Eckert (R-Rochester) in 1975.

It's budget time in Nassau and Suffolk counties, a perfect moment to take a step back and look at the burgeoning burden of public employee pension costs.

In 2010, Nassau County's contributions for public employee pensions were $96.9 million. For 2012, they're budgeted for $161.6 million. By 2013, they'll grow to $186.5 million -- nearly doubling in three years.

Go back to 2001, and Suffolk County's pension contributions were only $10 million. But they've swollen to $178 million for 2012, with projections for 2013 at $211.3 million.

All told, Long Island taxpayers will pay $1.25 billion just for county, school and local government pensions this year. That's about $1,600 per household of four, and doesn't include state employee pension costs.

And the state's public pension costs have grown at a similarly exponential rate. In 2001, all state and local governments outside New York City, along with school districts, contributed $368 million to the pension system. This year, it's $6.6 billion.

The massive burden of paying for government pensioners' ludicrously lush benefits now seriously hinders the ability to pay for the necessary functions of government.

Yet as public pension costs continue to explode, as revenues shrink and government services are reduced, the State Legislature didn't bother to take up Gov. Andrew M. Cuomo's call to rein in the unsustainable costs of public employee pension benefits last spring. Among the governor's most important goals is the exclusion of overtime pay from pension calculations, a contribution of 6 percent of salary toward pension costs for all state and local employees, and raising the retirement age. His plan aims to save $93 billion over the next 30 years.

Albany's decision to do nothing about pension costs carries grave consequences for the state's fiscal future. The Manhattan Institute's Empire Center calculates that the system covering state and local employees will more than double in costs over the next five years. And that's the good news. The bill to taxpayers for the teachers' retirement plan will more than quadruple.

Perhaps if our lawmakers looked at state history, they'd learn a lesson in leadership.

Back in 1976, against seemingly insurmountable odds, a 35-year-old conservative Republican state senator from Rochester, Fred Eckert, achieved sweeping public pension reform.

His bill, which compelled employee pension contributions for the first time and reduced some benefits, implemented the recommendations of New York's Commission on Public Employee Pensions and Retirement Systems. Following an intensive study, this group of serious business leaders, chaired by Union Carbide chief counsel Otto Kinzel, proposed legislation they said would save taxpayers $2 billion to $3 billion ($7 billion to $10.5 billion in today's dollars) in the first 10 years and triple that amount in the second decade, with greater billions saved thereafter.

In the 1970s, governors and state legislators of both parties opted to ignore both the problem and the Kinzel Commission's proposed solution. Except for Eckert. He had begun warning about excessive public pensions in the state during the 1972 campaign, in which he was elected to the Senate. Once in office, he persistently sounded alarms about excessive benefits, about deliberately deceptive underfunding of the systems and rampant abuses others were claiming only to have noticed just recently.

Gov. Nelson Rockefeller and later Gov. Hugh Carey adamantly opposed Eckert's pension reform bill. So did the legislative leaders of both parties in both houses. So did every public employee union in the state. And the public was largely unaware of the issue.

What Eckert did in June 1976 was simple and remarkably effective. During a week the legislature was in recess, he traveled throughout the state conducting an advocacy campaign on behalf of the idea of public pension reform.

In each city that he visited, Eckert's presentation of the facts and his warning that public pensions were "a ticking time bomb" that could blow apart the state's financial future resulted in widespread TV, radio and newspaper coverage that powerfully resonated with voters. He met with newspaper editorial boards -- including Newsday's -- and they agreed to join with him in pressuring Albany to enact his reform.

The following week, the Eckert pension reform bill that Albany had long refused to even discuss passed the Democratic-controlled Assembly by 119-26 and the Republican-controlled Senate by 45-9. It was promptly signed into law by Gov. Carey.

That history raises a question: In today's comparatively favorable political environment, why haven't New York's leaders achieved the kind of outcome that a largely unknown state senator won 35 years ago in such a hostile one?

In Eckert's time, few leaders were even talking about any problems with public pensions. Today, few people are unaware of what an enormous financial drain they are. Back then, Eckert was a lone voice in a single state. Today, governors and state legislators all across the country are achieving results in reining in pension costs. Look no further than New Jersey.

The 1976 reforms were important, but since then, the legislature has granted a steady stream of pension sweeteners to one group of public employees or another, resulting in new expenses for taxpayers that must be addressed.

The governor and legislature should move quickly to eliminate overtime pay from pension calculations, thus restricting the ability of state and local employees to game the system. And prospectively, they should replace the current defined benefit pension with a defined contribution, 401(k)-type system for employees hired after a future date certain, as Suffolk County Executive Steve Levy has urged.

The Senate and Assembly aren't scheduled to return to regular sessions until January. Like Eckert, our legislators and the governor should use this out-of-session time to present the case for pension reform around the state. Thus far, Cuomo has received praise for introducing a bill and issuing a news release about the need for public pension reform. But if he wants to deliver those reforms to New York's long-suffering taxpayers, he can take heart from Eckert's successful efforts 35 years ago. New York's finances are in such straits that there is no credible alternative to pension reforms that deliver dramatic, permanent savings to the taxpayers. Governor, we are counting on you to lead this charge.