Daily News

Tier VI plan tests labor

Labor groups immediately attacked Gov. Andrew Cuomo's plan for a new pension tier for future workers when he proposed it last month, and starting Wednesday the state's largest labor coalition will begin airing advertisements making its case.

But absent from the 60-second radio spots, which are paid for by the AFL-CIO, is any mention of the man whose plan it is opposing.

The script references "some politicians" who want to "attack what's left" of the middle-class, and frames pensions as a key to economic security for "firefighters, teachers, nurses, school bus drivers, police officers — the people we all depend on."

As air wars begin over some of the governor's more controversial budget proposals, opponents are treading lighter than in previous years. The opposition of labor groups to something like a new pension tier used to be the equivalent to a death sentence in the state Assembly, which is dominated by Democrats, but this year its leaders are keeping an open door.

"I can't predict the outcome, to be honest," said Assembly Majority Leader Ron Canestrari, D-Cohoes of the pension fight. "The governor has a way of getting what he wants, but this certainly is controversial here and it won't be an easy lift."

For one thing, Cuomo remains incredibly popular: A Siena Research Institute poll released Monday found 74 percent of those surveyed view him favorably, and 61 percent approve of the Democrat's job performance.

The Tier VI pension proposal would strip overtime calculations from pensions, increase the amount of time new employees must work to "vest" in a traditional, defined-benefit pension, and offer them a 401(k)-style plan that would reduce the state's liability for long-term costs. It is estimated to save all levels of government over $100 billion over 30 years, but have minimal immediate savings.

Sixty-nine percent of voters surveyed by Siena said they favor "creating a new pension system for future state and local government employees that will save money for government employers going forward and have employees make a larger contribution toward their retirement plan."

The unions are simply "operating inside a context, said Joseph Mercurio, a political consultant who usually works for Democrats,

"I think there's just a lot of realism about the times and the budget, and what voters are willing — or can absorb — in terms of tax increases," he said.

Stephen Madarasz, a spokesman for the Civil Service Employees Association, which represents many public employees, said an advertising campaign his union launched last week "is based on truth and consequences" because he believes the issues haven't been properly framed. Similar to the AFL-CIO ad, CSEA's TV spot makes no mention of Cuomo beyond showing his name on the cover of the budget proposal.

"The public is in favor (of Cuomo's plan) because they don't understand what's at issue," he said. "Most public employees get very meager pensions, so part of the strategy is trying to have the public understand there is a cost to these changes that will undermine the middle class and be bad for our economy."

The average pension for a CSEA retiree is $14,000, Madarasz said. Other unions, including those representing police officers and firefighters more likely to receive overtime, can range higher.

But until the issue is re-framed, the unions' thinking goes, it is pointless to engage in direct attacks on the politicians they oppose. Contrast that with 2009, when the health care workers union SEIU 1199 aired an ad in which a blind man in a wheelchair accused then-Gov. David Paterson, by name, of closing hospitals.

And there are other arrows in the governor's quiver. A coalition of business and real estate interests (as well as a private-sector labor group) called the Committee to Save New York has committed to defend Cuomo's agenda, including the pension proposal. Last year it spent more than $10 million doing so, and its spokesman Mike McKeon issued a statement characterizing the new AFL-CIO ads as "special interests (resorting) to scare tactics that are absolutely false in order to protect the status quo."

Cuomo can also force legislators to swallow the pension plan by including it in his budget proposal, which courts have ruled can only be amended by legislators to change expenditures; they can't change language directing how money is spent. After March 31, Cuomo could do the same in emergency appropriations needed to keep state agencies operating if no budget is in place, effectively presenting legislators with the choice of passing the plan or shutting down state government.

They are not eager to play chicken, and said they are working to find a compromise rather than beat back the entire proposal.

"I think what's happened over the last year and a half in working with Gov. Cuomo and working with special interests — or whatever you want to call them — is we've in most cases come to some sort of compromise situation where everybody is a little bit happy and a little bit unhappy," said Sen. Tom Libous, R-Binghamton.

Fiscal note warns of Tier 6 legal concern

A reader forwarded along the below fiscal note, submitted by the Teachers Retirement System in response to Gov. Andrew Cuomo's proposal for a new pension tier.

On page three, the trustees of the plan — which include some representatives of NYSUT, the teachers union — write that the risk-reward portion of it, where employees pay a lower contribution when markets boom but a higher one when they sage, may not be legal.

The Retirement System's General Counsel is of the opinion there is a risk that the provisions of the Tier 6 DB Plan that mandate increases in employee contribution rates depending upon increases in the employer contribution rate as determined by the Retirement System might be found by the courts, in light of prior decisions, to be an impairment of member benefits violating Article V, Section 7 of the New York State constitution.

Ouch.

This note isn't yet an official part of the legislative record, and Budget Division spokesman Morris Peters said it was "preliminary" in a "premature stage." Twenty-one day amendments to the budget have not yet come out.

"And while I have you," Peters wrote in an e-mail, "I will also say that any objective analysis of the State's current pension system would conclude that New York taxpayers are being crushed by the rising cost of public pensions, and it's just getting worse. The Governor has proposed fair and equitable pension reform which is critical to lowering the cost of government for taxpayers."

Here's the note:

AFL-CIO Hits "Politicians" Over New Pension Tier

The state AFL-CIO is launching a statewide radio ad in opposition to Gov. Andrew Cuomo's proposal for a new, less generous pension tier.
The ad warns that "some politicians are putting the retirement security of hard-working New Yorkers on the chopping block."

The ad is the latest by unions to knock the state budget and like the other ones doesn't mention the popular governor by name—even though the Tier VI proposal is Cuomo's idea. Cuomo does, after all, have a 74 percent favorability rating.

Sixty-nine percent said in a Siena poll yesterday that they support Cuomo's push to create a new, less generous pension tier for new state workers.

"Since the economic recession began, middle class New Yorkers have suffered," said Mario Cilento, president of the NYS AFL-CIO, in a statement. "Wage freezes, layoffs, and givebacks have been all too common. Now, the retirement security of workers is threatened by an ill-conceived Tier 6 proposal."

The ad is running across the state and calls on workers to call the governor's office or their state lawmakers. The number listed is the AFL-CIO action line—1-877-255-9417—which puts people in contact with the governor's office or the legislative office's switchboard.

Here's the script and ad:

AFLCIO-R12-01_NoSecreWhat's happening to the middle class?

Income for average families is down. Jobs are scarce. Opportunities working people thought they could count on no longer exist. For many New Yorkers, times are tough. And they could get even tougher.

Because some politicians are putting the retirement security of hard-working New Yorkers on the chopping block.

But going after the pensions of firefighters, teachers, nurses, school bus drivers, police officers – the people we all depend on—is the wrong way to go. It's time to rebuild the middle class, not attack what's left of it.

Working New Yorkers have been the backbone of our success for generations. When they suffer, we all pay the price. Call Albany at 1-877-255-9417. Tell them to fight for the middle class and STOP the attack on our pensions.

Pension 'air'strike

New York's powerful AFL-CIO yesterday fired its opening salvo against Gov. Cuomo's proposed pension overhaul for new government workers, with a statewide ad blitz calling the move an attack on the middle class.

The six-figure, 60-second radio spot was released a day after a Siena College poll showed 69 percent of New Yorkers back Cuomo's reforms — including a majority of union members.

Cuomo's so-called Tier 6 pension package would offer 401(k)-style plans and scale back pension benefits for future hires in order to rein in massive costs to state and local government. He said the plan would save the state, the city and other localities $113 billion over 30 years.

But to union leaders, those predictions are fighting words.

"What's happening to the middle class? Income for average families is down. Jobs are scarce. Opportunities working people thought they could count on no longer exist," the union ad's narrator says.

"For many New Yorkers, times are tough. And they could get even tougher, because some politicians are putting the retirement security of hardworking New Yorkers on the chopping block."

The ad will run in all major markets in the state for at least a week.

"But going after the pensions of firefighters, teachers, nurses, school bus drivers, police officers — the people we all depend on — is the wrong way to go. It's time to rebuild the middle class, not attack what's left of it . . . Tell them to fight for the middle class and stop the attack on our pensions," the AFL-CIO ad concludes.

The AFL-CIO is the umbrella group that represents union locals across the state. Those locals have some 2.5 million members.

Tellingly, the hard-hitting ad does not criticize Cuomo by name. He has a sky-high 74 percent public-approval rating and 61 percent job-approval rating.
AFL-CIO President Mario Cilento said the pension fight is about the retirement security of all workers, not just public employees. He argued that 401(k) plans common in the private sector — in which the investment risk is shifted to workers — are inadequate.

Labor leaders got an assist yesterday from state Comptroller Tom DiNapoli, who panned Cuomo's pension overhaul during testimony yesterday on the governor's executive budget plan, saying it would "reduce retirement security for future workers."

Meanwhile, a pro-business group called the Committee to Save New York indicated that it may spend millions of dollars on the airwaves to help win support for the governor's pension plan.

"With pension costs expected to soar by more than 180 percent in the next few years, reforms that do not impact a single current worker are more important than ever," said group spokesman Mike McKeon.

"We don't discuss strategy, but we will fight for reforms we believe are vital to renew New York's economy and secure our future.''

Drawing Fire, Deal Gives Agency Staff Power to See State Workers' Tax Files

Lawmakers and labor unions on Monday pointedly criticized a secret decision by Gov. Andrew M. Cuomo's administration to greatly expand the state inspector general's access to tax returns filed by state employees.

The State Department of Taxation and Finance signed an agreement last month with the inspector general's office to allow dozens of people to look at the records, as part of investigations, without needing approval from the tax department or a court.

While only a small number of investigators had previously been able to see the tax filings, the agreement, which was made public on Monday, extended clearance to 63 employees of the inspector general's office, including several low-level aides and its press spokesman.

At a budget hearing on Monday, lawmakers assailed Mr. Cuomo's tax commissioner, Thomas H. Mattox, over the matter. The dispute comes amid growing questions about policy moves by Mr. Cuomo that further empower the executive branch, like creating a new financial regulatory agency that critics say encroaches on the attorney general's jurisdiction.

One high-ranking Republican, State Senator John A. DeFrancisco of the Syracuse area, described the new tax records policy as "very, very dangerous" and suggested it could allow the Cuomo administration to go on witch hunts against state workers.

Speaking to reporters, Mr. DeFrancisco raised a hypothetical situation, with the possibility that the inspector general's office could use its new power to target a union official who had been "a pain to the administration."

"What prevents the I.G. from starting an investigation?" he asked. Struggling to tie the employee to any wrongdoing, Mr. DeFrancisco said, the inspector general could conclude, "Well, let's look at his tax returns and find something there."

Asked by reporters about the arrangement, the Assembly speaker, Sheldon Silver, a Manhattan Democrat, said he also had questions about it. "I think there are just general privacy concerns that people are entitled to," Mr. Silver said.

The policy was laid out in a memorandum of understanding between Mr. Mattox and the inspector general, Ellen N. Biben, who last week was appointed executive director of the new state ethics commission. The memorandum states that employees in the inspector general's office can review the records only to investigate possible misconduct by tax department employees or "tax crimes" committed by workers at other state agencies.

The existence of the memorandum was reported Monday by The Times Union of Albany. But in a joint statement, the inspector general's office and the tax department said the arrangement was aimed only at maintaining the authority of investigatory jobs being transferred from the tax department to the inspector general's office in an efficiency move. Though assigned to the tax department, the investigators in such positions previously reported to both the tax department and the inspector general.

The memorandum "does not, and was not, intended to expand or diminish any authority or function, and to assert otherwise would be wrong," the statement said.

A spokesman for Mr. Cuomo said the governor had not been aware of the memorandum.

At the budget hearing, Mr. Mattox defended the arrangement by assuring lawmakers that the investigators in the inspector general's office given access to tax records would be required to follow strict confidentiality rules.

In a telephone interview, Joshua D. Blank, a professor at New York University School of Law who specializes in taxpayer privacy, said "sharing of tax return information between government agencies is not unusual."

"The interesting aspect of the memo is the chronology does shift a bit, and the I.G. employees are able to identify possible instances of abuse and then inform the tax authority," Professor Blank said. "The idea is to treat the inspector general's employees as though they are tax auditors."

But Steven U. Teitelbaum, who was deputy commissioner and counsel for the tax department during the administration of Gov. George E. Pataki, described it as "not even remotely legal."

"What it's done is it has created a second class of individuals: if you work for the state, you have now given up your right to confidentiality on your income tax, and really all of your financial information," Mr. Teitelbaum said.

The state's public employee unions expressed similar concern. A spokeswoman for the Public Employees Federation said the union's lawyers were assessing the memo.

"It seems to pose a real potential for violating our members' privacy rights," the spokeswoman, Sherry Halbrook, said. "It came as news to us."

A spokesman for the Civil Service Employees Association, Stephen Madarasz, said the union was also trying to determine the legality of the measure. "At first blush, it certainly appears to be an overly broad power," Mr. Madarasz said.

Cuomo's proposal for a less expensive pension plan would cost state, local governments millions to implement

A new analysis of Gov. Andrew Cuomo's proposal for a less expensive pension system for future government hires concluded it can't be put in place by April 1 as planned and would cost state and local governments millions of dollars to implement.

The analysis by actuaries in the state Comptroller's Office on Thursday analyzed Cuomo's plan for a new lower pension tier that would include an option for a 401 (k)-type retirement plan. But implementing the new system has taken other states more than a year and would cost New York state government alone $7 million to $16 million to start and operate with more costs for local governments, according to the comptroller's report.

For future hires who choose a pension rather than the 401(k) that invests in stocks and bonds, salaries for pension calculations will be capped at the governor's $179,000 salary, according to the report from the staff of Comptroller Thomas DiNapoli. That would reduce the benefit for physicians and some university professors paid more than the governor at a time that Cuomo said raises are needed soon to attract and retain top talent.

It was a rare and detailed critique of the proposal outside of public employee unions for the measure Cuomo said will take an $83 billion burden off taxpayers over 30 years. The taxpayers' cost of public pensions will rise from $2.3 billion in 2009-10 to over $6 billion in 2014-15 if nothing is changed, Cuomo said earlier this week.

Cuomo's proposal also would address abuses such as raising final salaries through extraordinary amounts of overtime in the last years of work to inflate pension checks and other measures to head off what he calls unsustainable costs for taxpayers. "We can't live with it another year," Cuomo told the New York State Association of Counties, to applause from the local officials.

DiNapoli, by law the sole trustee of the pension system, has been critical of Cuomo's proposal to move from a traditional pension to a 401(k) type of plan that doesn't guarantee a specific payout upon retirement, even if it's voluntary at this point.

DiNapoli also notes some disability insurance protection would be lost for future hires under the proposal. But he said more changes are expected before the proposal reaches a vote in the Legislature.

Any pension change that includes a new 401(k) provision would take time for the state and local governments to put in place. "Certainly, I think you'd be talking about more than a year, based on past experience," DiNapoli said.

High cost of Tier VI pensions

Gov. Andrew Cuomo wants to create a new pension plan for nurses, teachers, firefighters, and other workers employed by state and local governments. The new plan, Tier VI, would offer the choice of a dramatically diminished defined benefit pension plan or a 401(k) plan.

In practice, most workers would be lured into the 401(k). The new pension benefit would offer a smaller benefit and require workers to work longer and contribute up to double the current employee contribution. A little publicized wrinkle, which would have major consequences for workers, would require employees to pay an even larger percentage of their salary if the stock market declines.

Proponents of the new pension tier point out that even though the plan does nothing to address the current budget deficit, it would provide significant long-term savings. They're right.

The benefits provided by this plan, which is part of the governor's state budget proposal, are so inferior that it's quite obvious that it would be cheaper. If current workers are driving a Ford, the new plan offers a Yugo. Buying a budget car may be cheaper, but you get what you pay for; there are hidden costs in terms of maintenance and useful lifespan. Our elected leaders should keep in mind that just like a cheap car, the savings under the budget retirement plan provided by Tier VI will be offset by unexpected costs.

First, strong defined benefit plans reduce the costs of turnover. An October study by the National Institute on Retirement Security found that defined benefit pension plans help recruit high-quality teachers and retain highly productive teachers longer as opposed to defined contribution, 401(k) style, accounts.

Turnover reduces productivity and increases costs in terms of recruitment, hiring, administrative processing, and training. These are real costs that have real impact on bottom line and on the education of our children.

Second, reducing retirement security for middle-class workers actually reduces state and local governments' own income — that is, taxes. Retirees spend their money supporting local business, thereby generating jobs and taxes. The NIRS has found in another study that retiree expenditures stemming from state and local pensions supported nearly 137,000 jobs in New York, accounting for $10.5 billion in wages and salaries and $4.1 billion in federal, state and local tax revenue.

Third, employers can pay now and leverage those contributions with market returns and employee contributions to fund pensions. Or they will pay later, when insufficient retirement benefits leave more workers dependent on the safety net.

Retirement is often described as a three-legged stool of pensions, Social Security and savings. What happens when we knock one of those legs out with a sledgehammer?

We will have more senior citizens living at or near poverty and needing assistance from the very government that made the shortsighted decision to demolish their pension.

Finally, defined contribution plans, like 401(k)s, are relatively inefficient. As Pulitzer Prize-winning journalist David Cay Johnston points out, "defined benefit pension plans, properly administered, increase economic efficiency, while the newer defined contribution plans have high costs."

In other words, the increased cost for transactions and administration for defined contribution investments actually divert money that could be going into retirees' pockets.

Tier VI would not be a panacea. Policymakers should approach it with caution. Opting for inferior retirement benefits will endanger the security of their constituents and will have unanticipated costs that undermine promised savings.

Mario Cilento is president of the New York State AFL-CIO.

Wednesday, February 8, 2012

Did You Know – Did you know you can you can look up union acronyms by keyword, as well as track union affiliation and merger history? Click "AFL-CIO Research Tools" on the left-hand menu of Bargaining@Work and select "Union Affiliation and Merger History". From there, you can either enter the union acronym (if known) or a keyword associated with the union you'd like to track, and press the "Submit Query" button to display the results. Select the "backward" option to see a list of the unions that have merged into the one you're researching. Select the "forward" option to see if the union you're researching has been merged into another.

Top News – The New York Hotel Trades Council (NYHTC) has reached a tentative seven-year agreement that would provide 30,000 hotel workers in New York City with significant wage and pension increases, as well as maintain employer-paid healthcare. The contract also includes a provision requiring hotels to provide some workers with panic buttons they can carry on their person, so that they might call for help if they ever feel endangered on the job. ◦◦ In Miami, Fla., Service Employees International Union (SEIU) 1991 reached a tentative agreement with Jackson Health System designed to save the struggling hospital $150 million over three years. ◦◦ One month after rejecting an earlier proposal, members of United Steelworkers (USW) at three Timken plants in Ohio will vote on a new five-year tentative agreement. The current contract does not expire until September 2013, but the company is looking to secure a new deal before it expands its facility in Faircrest, Ohio.

Healthcare – A strike was narrowly averted at New York's Flushing Hospital Medical Center when the New York State Nurses Association (NYSNA-NFN-Ind.) reached a tentative deal with management. The 430 nurses were planning to strike yesterday, after their last contract expired Dec. 31 and management refused to allow a temporary extension. If ratified, the new contract will run through December 2014.

Global Labor Movement – In Brazil, police officers in states across the country are threatening Carnival celebrations as they demand higher wages and improved working conditions. In Bahia, thousands of officers have been on strike since Jan. 31, while police officers in Rio de Janeiro are planning to meet tomorrow to discuss a possible strike. ◦◦ Union leaders in Israel launched a general strike today, after late-night talks between the Histadrut labor federation and the government failed to produce an agreement on the use of contract workers.

February 3, 2012

Pension ALERT -Oppose Tier 6

Governor Cuomo's proposed Tier 6 provisions would undermine retirement security for thousands of New Yorkers.  Furthermore, it will provide no short-term savings to the State or localities and would only mean that working people would have to work longer, pay more and benefit less.  Tier 6 will force people into a 401(k) and will cause your Pension fund to go under.  The constitutional guarantee is useless if the pension fund is broke.  This happened in Rhode Island - current retirees had to take as much as a 50% loss in their pensions.

Email Your State Legislators Now.

Tell your State Legislators, "Don't Put My Retirement at Risk - Oppose Tier 6"

OCFS Policies Put Public Safety at Risk

CSEA issued a press release this week that slammed the Office of Children and Family Services (OCFS) for policies that led to the shooting of a New York City Police Officer.  

OCFS had released the suspected shooter, Luis (Baby) Ortiz, from the Goshen Secure Center in Orange County, even though he was in county jail for assaulting an OCFS aide.  OCFS could have extended his term at the facility but instead chose to release him.

This incident is just the latest violent crime caused by misguided OCFS policies.  CSEA fears that these types of incidents will only increase if OCFS' plan to release more youths from upstate facilities and place them back in their home communities is authorized in the state budget.

CSEA is opposed to this plan and will be submitting testimony in opposition to it at the budget hearing for OCFS on February 13.

You can read the press release regarding this incident here.