Benefit Sweetener Scorecard 2016
Now that the New York State Budget for fiscal year 2017 has been adopted, the Legislature will take up others matters including bills introduced to enhance the benefits of State and local public employees and retirees. This first edition of the Citizens Budget Commission’s 2016 Benefit Sweetener Scorecard identifies more than 60 such bills active this session. These bills could cost the State and local governments hundreds of millions of dollars per year, and since about half the bills do not specify a fiscal impact, the potential costs could be significantly greater. Bills to enhance disability benefits are most common, but other costly bills increase pension benefits, limit changes to health insurance benefits, enhance early retirement plans, and enhance death benefits. While only two of the bills have passed either house of the Legislature so far this year, in past years most benefit sweeteners were adopted in the last weeks of session suggesting much action may be imminent.
Enhancing Disability Benefits
Twenty-three bills enhance disability payments for public employees. Eight of these bills impact only New York City uniformed employees and expand presumptions that certain injuries or diseases were a result of employment and provide cost of living adjustments (COLA) for disability payments. Another bill, A7854/S5705, would enhance the calculation of disability benefits, eliminate the social security disability allowance offset, and restore the COLA for most New York City uniformed employees. The cost of these bills ranges from $0.5 million to $41 million in the first year. As noted in last year’s Scorecard, bills to enhance disability benefits for recently hired New York City police and fire employees injured in the line of duty would roll back important and sensible reforms projected to save New York City $21 billion over 30 years.2
Three bills would enhance disability payments for volunteer ambulance workers or volunteer firefighters, one of which has already passed the Assembly (A1627/S2719). Two bills would provide full salaries to police officers who are injured on the job and cannot return to work – one bill applies only to the State Police (A2343/S532) and another applies to Port Authority Police (A9438). Three bills expand the presumption of an on-the-job injury to include New York City Deputy Sheriffs who develop heart disease (A5304); New York City fire alarm dispatchers who develop post-traumatic stress disorder (A7162); and any police officers or firefighters who contract methicillin-resistant staphylococcus aureus (MRSA) or Staph/MRSA (S6817). None of these bills provide details on their financial impact for New York State or localities.
Four bills would expand eligibility for an enhanced disability pension and would cost between $0.3 million and $1.8 million annually. Three of these bills would be applicable only in Nassau County.
Increased Pension Benefits
Ten bills would increase pension benefits, mostly for current retirees. The most expensive of these (A4295) would cost $46 million in the first year and allow a judge or justice to elect to have the most recent annual salary, not an average of 36 months’ wages used as the basis (known as final average salary) for calculating pension amounts. Three bills (A9496/S6282, S3919, and S4342) would enhance COLAs for current retirees; two bills (A7007 and S4623) would allow teachers to claim credit for years teaching outside the public school system; and another bill (A6867-A/S6746) would increase the minimum retirement allowance for teachers.
Another bill, which has already passed the Assembly (A3879-b/S1968-a), would allow certain State Department of Corrections and Community Service superintendents to opt out of the half pay after 25 years of service pension plan and return to the traditional pension plan, boosting benefits for certain retirees. This proposal would cost more than $3 million in retroactive payments. Another bill (S7386) would eliminate restrictions on transferring pension credits among certain New York City pension systems, costing approximately $25,000 per year.
Two bills would include additional types of pay in calculating final average salary: A4337 would include mandatory overtime for Tier V and Tier VI State and local employees and A9446/S6716 would include compensatory time for Suffolk County uniformed police and fire personnel.
Limiting Health Insurance Changes
Six bills would limit changes to retiree health insurance. A2887 would prohibit any employer, public or private, from diminishing a benefit awarded to a retiree. Four separate bills would prohibit state and local government entities from diminishing post-employment health benefits. Another bill—A5308/S3202—would freeze state retiree premium shares to the dollar amount paid at the time of retirement, regardless of increases in health insurance premiums charged by insurers. Since these bills would prohibit future changes which are not known at this time, no specific costs are provided.2
Enhancing Early Retirement Plans
Early retirement plans, which allow certain uniformed public employees to retiree with 20 or 25 years of service regardless of age, would be enhanced by six bills. The two most egregious have no fiscal estimate but would allow employers to offer the early retirement plan with zero contribution from employees (A7251 and A9702/S7023). Depending on when someone joined the retirement system and her rate of pay, employee contribution rates under these plans are as high as 6 percent. Another bill (A9850/S7232) would decrease the employee contribution rate under the New York City Transit Authority 25-year/55-age plan from the current graded schedule between 3 percent and 6 percent to 2 percent of wages, costing the Authority more than $21 million per year. Other proposed bills would expand the pool of employees eligible to enroll in early retirement plans and have unknown fiscal impacts.
Enhanced Death Benefits
Four bills would enhance death benefits for public employees. The two costliest bills (A7801-A/S5936 and S5245) would enhance in-service death benefits for State correction officers who are retirement eligible. Costs for A7801-A/S5936 would be $13.9 million in the first year, while costs for S5245 would exceed $36 million in the first year due to past service costs. Another bill (A9607/S7176) would increase the lump sum death benefit for retired State employees by $500 and cost the state $1.9 million in the first year. A fourth bill would extend the special accidental death benefit (SADB) to New York City sanitation workers. The SADB is available to certain public employees who die as a result of an on-the-job accident.3 It is paid by the State and is equal to wages, less accidental death benefits and social security benefits.
Two bills would remove or relax restrictions on post-retirement public sector earnings, allowing uniformed police and fire retirees to earn more income without a diminution of their pension. Another bill would remove post-retirement earnings limitations for New York City uniformed correction retirees who are receiving a disability retirement. Two bills would expand eligibility for New York City’s variable supplement fund (VSF) payments of $12,000 annually for retired law enforcement and fire officers. A6988/S5972 would provide the payment to those who retired between 1968 and 1987 at an annual cost to New York City of $16 million. S6527 would remove the 20-year employment requirement for eligibility, costing New York City an unknown amount. Other bills to increase mandatory retirement ages (A9851/S7387) and eliminate maximum hiring ages (A2341/S531) have minimal or no fiscal impact stated.
The bills detailed in the scorecard and described above should be rejected. They would impose expensive mandates on New York State and local governments without improving services for taxpayers. Many of these proposals to enhance expensive employee benefits would undermine hard-fought reforms that yield significant savings and should remain in place.
As the legislative session continues, the scorecard will be updated.
- Citizens Budget Commission, “Pension Sweetener Scorecard – Disability Benefits Edition,” Citizens Budget Commission Blog (June 2, 2015), www.cbcny.org/cbc-blogs/blogs/pension-sweetener-scorecard-%E2%80%93-disability-edition.
- The Executive budget included a proposal to reform retiree health care benefits that would have saved taxpayers as much as $17.5 billion; unfortunately it was not included in the adopted budget. See: David Friedfel, “Pass the Governor’s Proposal to Reform State Retiree Health Insurance Benefits,” Citizens Budget Commission Blog (March 14, 2016), www.cbcny.org/cbc-blogs/blogs/pass-governor%E2%80%99s-proposal-reform-state-retiree-health-insurance-benefits.
- Currently SADB only applies to municipal police and fire departments, New York City Transit Authority police force, New York City Housing Authority police force, uniformed New York City correction staff, uniformed county sheriff department staff, New York City or New York City Health + Hospitals emergency medical technicians and related staff, and New York City Bridge and Tunnel employees.