BY SANDRA PEDDIE | email@example.com,
state officials struggle to close gaping holes in the budget and deal with
skyrocketing retirement costs, records show that at least 1,325 retirees
collect six-figure pensions from the state - and nearly one-half of them are
from Long Island.
The number and size of so-called jumbo pensions, fueled by high public salaries
and generous retirement rules, lie at the heart of the debate over the daunting
costs of public pensions in New York State, which have a price tag of
more than $10 billion a year.
"What's happened is that many government positions are paying better than
they used to, [and] the pension has remained super-generous," said Peter
Sepp, spokesman for the National Taxpayers Union, a nonprofit watchdog group in
Pension experts say these jumbo pensions will continue to climb as baby boomers
retire. And with New York state retirement funds
compelled to make up losses of more than $73 billion because of the recession,
many are worried that school districts and local governments will have to turn
to taxpayers to cover the costs. Private accounts such as a 401(k)rise and fall
with the market, and have no such safety net.
going to be massive increases" in taxes to make up for the losses, said
E.J. McMahon, executive director of the Empire Center for Public Policy, a
conservative think tank in Albany.
Among the local recipients of jumbo pensions - which are high because pensions
are based on salaries and length of time in the system - are State Republican
leader Joseph Mondello, who collects an annual pension of $113,550; current
Garden City Village Clerk Robert Schoelle Jr. who gets $139,220; and retired
Commack Superintendent James Hunderfund, who has the highest pension in the
state - $316,245 a year, according to records.
The potential crisis facing New York has its counterpart in the
financial turmoil in California. There, the city of Vallejo declared bankruptcy last
year, after the collapse of the housing market made it impossible to cover high
salaries and pension costs, which, like New YorkState, are guaranteed by the
state Constitution. Several other cities in the state are considering following
suit. In New York over the past month, state
officials from Gov. David Paterson on down have warned
that New York is not far behind California.
At least 28 states are considering legislation - like raising the retirement
age or requiring higher employee contributions - to rein in pension costs.
Earlier this year, Paterson proposed similar changes,
but his efforts foundered after fierce opposition from public workers' unions.
"If you refuse to say no to the unions and the spending interests, we're
going to end up just like California," said Assemb.
Michael Fitzpatrick (R,C-St. James). "There's an inability to deal with
The full effect of the market downturn and its impact on pension costs won't be
felt in New York until two years from now
because fund managers base what they charge governments on a five-year average.
But when it hits - schools will feel it in the 2010-2011 school year and local
governments a little later - it will be what some are calling a "pension
tsunami," with a tab in the millions.
"You're talking about tax increases that could go, just for this alone,
anywhere from a 5 or 6 percent increase all the way up to a 15 percent tax
increase," said Fred Gorman, a founder of Long Islanders for Educational
Reform, a watchdog group.
Coupled with the expected loss of federal stimulus money by then, "It is
alarming," said Robert Lowry, deputy director of the New York State
Council of School Superintendents. Last month's school budget increases were
generally small because of the use of federal stimulus money.
Unlike most private retirees, New York public workers contribute
to their pensions for only their first 10 years of employment. In addition,
they receive cost-of-living increases and lifetime health insurance, pay no
state or local taxes on their pensions and do not have to deduct an offset for
for Social Security.
Several of those pension sweeteners were approved by the 2000 state
Legislature, and they have dramatically driven up costs, according to local
budget officials. The Massapequa school district, for
example, contributed $220,000 for pensions in the 2000-2001 school year. Last
year, it paid $6.5 million, said Alan Adcock, assistant business
"In my opinion, the retirement system costs since that time period have
been one of the most significant costs increases for school districts," he
Currently, school districts across Long Island pay 7.93 percent of
payroll to fund pension liabilities. Though the state Teachers Retirement Fund
has not yet set the rate for the 2010-2011 school year, it warned of a
"significant increase" in a memo sent in February to administrators.
A number of administrators expect the rate to nearly double. In Massapequa, that would mean an
additional $5 million out of a $171 million budget, Adcock said. His district
has already begun setting aside money in a reserve fund to cushion the blow.
For Jim Malloy, a 44-year-old self-employed business consultant from Smithtown, the solution is simple:
He plans to move out state..
"I feel like a fool," he said. "I feel like I get up and go to work
everyday to pay for everyone else's retirement."