Andrew Cuomo the frontrunning mayoral candidate is undermining an important achievement of Andrew Cuomo the governor in telling the teachers union that he wants to undo a major pension reform called Tier 6 that Andrew Cuomo the governor won in 2012. Good thing for the city’s fiscal health that the mayor has no say over pensions, as they are a state matter.
The political posturing (or is it pandering?) in line with the other City Hall contenders at the weekend candidate forum of the United Federation of Teachers, shows that Cuomo wants the UFT endorsement (although we can’t recall the UFT ever backing a winning mayor) and he’s willing to do a double flip-flop to please the group. He should know better, but he’s following the first goal of a campaign: trying to win.
A little reminder is in order of the need for the pension reforms and the dangers of backsliding as the UFT wants and that the candidates (Cuomo and six-pack he is facing in the Democratic Primary) are aiding and abetting.
New York’s very generous public employee pensions are a guaranteed retirement benefit that basically no one in the private sector has anymore. But in the decades since they were first invented Albany has periodically needed to limit the program, by raising the retirement age or reducing the payments for the retirees or having them chip in something.
However, since the state’s highest court has ruled that pensions are a contract under the state Constitution and cannot be changed once granted, any changes can only impact employees hired later on.
Anyone hired for a state or local government job in New York before July 1, 1973 is in Tier 1. It wasn’t called Tier 1 until Tier 2 was created at that date. Tier 2 closed when Tier 3 was created in 1976. That was a huge change as workers had to put in 3% of their earnings into the system. Then there was Tier 4 and Tier 5 and Tier 6, each tightening or loosening the rules on the retirement system.
The last change was Tier 6 in 2012, which set the full retirement age at 63. Seeking support from a union that wants to revert the retirement age back to 55, Cuomo said he’s with them, saying “That’s ancient history,” of his correct policy from 2012. Cuomo said, “the state has the funding, the pension fund threat is over.” Until the next time, that is.
While the state sets the pension parameters (meaning that mayor has nada to do with it), the city has to pay out the pensions, or more precisely the five city-run pension programs (there is one for teachers, one for cops, one for firefighters, one for non-teaching education employees and one for everyone else).
As the defined benefits to retirees are guaranteed, if the funds don’t have enough from their investment income and the contributions of employees, taxpayers have to make up the difference. That’s why there has been a half century of pension reform, going back to 1973
Our advice to Cuomo and all of his competitors is to stay out of pension politics. Playing that game will cost the city a lot in the long run, well after your four or eight years in City Hall are up.
