Padded Pensions Add to New York Fiscal Woes

The New York Times, May 20th, 2010

In Yonkers, more than 100 retired police officers and firefighters are
collecting pensions greater than their pay when they were working. One
of the youngest, Hugo Tassone, retired at 44 with a base pay of about
$74,000 a year. His pension is now $101,333 a year.

It’s what the system promised, said Mr. Tassone, now 47, adding that he
did nothing wrong by adding lots of overtime to his base pay shortly
before retiring. “I don’t understand how the working guy that held up
their end of the bargain became the problem,” he said.

Despite a pension investigation by the New York attorney general, an
audit concluding that some police officers in the city broke overtime
rules to increase their payouts and the mayor’s statements that future
pensions should be based on regular pay, not overtime, these practices
persist in Yonkers.

The city has even arranged for its police to put in overtime as flagmen
on Consolidated
Edison
construction sites. Though a company is paying the bill, the
city is actually reporting the work as city overtime to the New York
State pension fund, padding future payouts — an arrangement at odds with
the spirit of public employment, if not the law.

The Yonkers experience shows how errors, misunderstandings and wishful
thinking are piling hidden new costs onto New York’s public pension
system every year, worsening the state’s current fiscal crisis. And the
problem is not just in New York. Public pension costs are ballooning
everywhere, throwing budgets out of whack and raising the question of
whether venerable state pension systems are viable.

In fact, the cost of public pensions has been systemically
underestimated nationwide for more than two decades, say some analysts.
By these estimates, state and local officials
have promised $5 trillion worth of benefits while thinking they were
committing taxpayers to roughly half that amount.

The use of public money for outsize retirement pay really stings when
budgets don’t balance, teachers are being laid off, furloughs are being
planned and everything from poison-control centers to Alzheimer’s day
care is being cut, as is happening in New York.

Read more of this article.

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