Pension sweeteners a bitter prospect for New York City
New York Daily News
On Thursday, the City Council adopted a budget for fiscal year 2019 that totals almost $90 billion. Almost $10 billion will be devoted to pensions for public employees, and the amount is projected to continue growing steadily over the next decade.
And yet, for some, this is not enough. Bills recently introduced in the State Legislature would hike the cost of pensions for NYC police and firefighters, and a majority of City Council members support a home rule message. The Mayor is right to oppose these bills, and they should be rejected.
For more than a decade, New York City’s budget suffered under the weight of rapidly growing pension costs; between fiscal years 2003 and 2012, contributions to the pension funds grew from $1.8 billion to $8.0 billion – more than the city spent to provide police, fire, and correction services. The rapidly growing costs, spurred by generous enhancements made to benefits in 2000 and investment losses in the pension funds in fiscal years 2001 and 2002, crowded out investment in other city priorities. For example, the city delayed expansion of day care and cancelled operating support to NYCHA.
Reforms enacted in 2012 created more reasonable benefits for newly hired city employees. As a result, pension costs, although still substantial, are growing at a more manageable rate. But now police and fire unions are advocating for a return to the more pricey benefits of the past for recently hired members.
The estimated cost of one proposed bill is $20 million next year, doubling in five years. And any enhancement in benefits for police and fire will inevitably lead to a push for the same for other uniformed city personnel, and then for teachers and civilian workers. Thus, reopening the reforms will inevitably put the city back in the position of squeezing other services and priorities to spend more on pensions.
New York City police officers and firefighters, including those hired since the new benefit tier went into effect, get extremely generous compensation, including pension benefits. They can count virtually all overtime toward their pensions while many large cities exclude overtime entirely and New York state limits it to about 15% of base salary for troopers and other local law enforcement officers. The average annual pension for a recently retired NYC police officer is $74,500 and $118,000 for a recently retired firefighter, compared to $35,000 for a civilian employee. (Reasonable concerns about inadequate disability benefits for junior uniformed employees were addressed in targeted enhancements enacted last year.) The value of total compensation for a police officer at 5½ years of service can reach over $200,000.
Pension benefits are not deterring new recruits from joining the police and fire departments. According to the city Office of Labor Relations, the NYPD has been able to double its Police Academy classes. The last two open FDNY job exams had more than 40,000 applicants each for approximately 2,500 positions. These are well paid, highly respected jobs.
The Council and the Legislature should not pass an unwarranted sweetener that will be bitter for taxpayers.