Tuesday, Dec 24th

State Pensions Guaranteed by NYS Constitution: Clarification from State Assemblywoman Amy Paulin

PaulinBigHere is a letter from Assemblywoman Amy Paulin with details about the Retirement agreements for NYS employees: I've confirmed with the Thomas Nitido, the Deputy Comptroller for the New York State and Local Retirement System, that it would be unconstitutional for the Legislature to reinstate the 3% employee pension contribution for Tiers 3 & 4 following completion of 10 years of service. The benefits provided are constitutionally protected and cannot be diminished retroactively by the Legislature or by the courts. My understanding is that even if local officials were able to negotiate obtaining some additional contribution by employees, there would be no mechanism by which such additional contributions could be paid into the State retirement system (the retirement system legally cannot accept employee contributions after 10 years of service). While it is possible that an employer might be able to negotiate obtaining contributions from its employees, i.e. in the form of a wage reduction, to help the employer pay its pension costs, it is difficult to imagine how that would in fact occur. (For example, the pension benefit is a constitutionally protected right of the individual employee yet the additional employee contribution/wage reduction would be negotiated by the collective.) If such an agreement were challenged in court, it is possible that the courts would view this as an end-run around the unconstitutional diminution of the employee's benefits.

Note that I understand you may have learned that years ago the State Comptroller unilaterally eliminated the mandatory employee contribution after 10 years of service. To clarify, in 2000, the Governor signed into law legislation that, among other things, required employees enrolled in Tiers 3 & 4 to make 3% contributions until the member accrued 10 years of service. (When those Tiers were first established, employees had been required to make such contributions for the duration of service.) I understand the State Comptroller advocated for the changed but he could not, and did not, effectuate the change in the law nor could the Comptroller do so now.

I have been very sensitive to the fiscal pressure on local governments and school districts resulting from the onerous increases in pension costs, and continue to advocate for mandate relief and to look for other ways to reform the system to ease the burden on local governments and school districts. In the last 3 years alone, the Legislature has established two new Tiers, Tier V and Tier VI, requiring, among other things, increased employee contributions for the duration of service, limits on benefits paid and limits on the amount of overtime included in wages for purposes of calculating benefits. (It had been almost 30 years since the last Tier (Tier IV) had been established.)

In an effort to reform the system, I am currently a co-sponsor on 3 bills:
· This bill requires the State to pay pension costs in excess of an up to 2% increase in pension costs to municipalities and schools (no bill number yet).
· A. 5105. This bill freezes the current retirement tier of all elected officials and non-civil service appointed employees in New York State, and creates a new defined contribution plan for all elected officials and non-civil service appointees in New York State.
· A.5206. This bill creates a defined contribution plan for employees hired on or after April 1, 2012. This plan would be optional for all employees, with the exception that newly elected officials would be deemed mandatory member.

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