Mr. Cuomo’s Courage

For years, decades even, New York has been dithering about an impending budget catastrophe: the ever-escalating cost of offering gold-plated and utterly outdated pension benefits to public employees. Everybody knew something had to be done. There were some brave attempts to create a fix here and there, but unions made it clear that they would punish anybody who dared to even consider radical reform.

Finally, we have a governor who understands that his first duty must be to the taxpayer, not to the unions—even though many of those unions supported his campaign. Governor Andrew Cuomo has decided to face the issue head-on with a broad plan to reform pension benefits in both the state and in New York City. His quote was simple and direct: “The numbers speak for themselves,” he declared. “The pension system as we know it is unsustainable.”

Precisely. He is not the first person to realize this. But there is a difference between spotting a problem and doing something about it. Mr. Cuomo has chosen the latter course. He wants to raise the retirement age for most state workers from 62 to 65, and for teachers from a youthful 57 to a more-realistic 62. State and city workers would have to contribute 6 percent of their earnings to their pensions, up from 3 percent.

Best of all, Mr. Cuomo is moving aggressively against the corrupt but widely accepted practice of pension-padding. That’s when workers run up stunning overtime earnings in the final years on the job. Pensions are then calculated based on the inflated figure rather than on workers’ true salaries. Enough is enough. The governor wants to exclude overtime earnings and unused sick time from pension considerations. Predictably, the union bosses are raising hell about these common-sense solutions. Danny Donohue, who heads the state’s largest public employee union, played the class card by accusing the governor of carrying out the wishes of his “millionaire friends” at the expense of “the real working people of New York.”

That’s curious—does Mr. Donohue believe that public employees are the only working people in New York? If so, he has been in the union business too long. There are millions of real working people in New York who are being crushed by high taxes. They are the people paying for those pensions and health benefits. They’re the people who suffer when public employees work the system to inflate their pensions.

Another union boss complained that the governor was imposing horrendous cuts for what is, in his words, a “transient problem.” Transient? Anybody who follows state government knows that Albany’s finances have been in disorder for years, and all signs indicate that things will only get far worse without true pension and benefit reform. Again, anybody who thinks that the state’s problems are “transient” really isn’t paying attention or simply doesn’t care about the tax burden on other working people.

If anything, the governor could have gone even further with reform. He could have proposed an end to the state’s generous system of defined-benefit pensions, in which many—but not all—state retirees collect a fixed percentage of their salaries until they die. All governments are going to have to shift to 401(k)-style pensions in the coming years. Mr. Cuomo isn’t prepared to that go far, at least not yet.

Still, what he has proposed is revolutionary enough. Early-retirement packages would come to an end. Workers would be vested after 12 years in the system instead of 10 or, in the case of some uniformed workers, five.

The state and city simply can’t afford a pension-and-benefit system designed for another age. The city now spends $8.4 billion per year on pension costs. A decade ago, the figure was $1.1 billion. At the state and local government levels outside of New York City, pension costs have gone from $368 million per year to $6.6 billion over the past 10 years.

Mr. Cuomo realizes that this is simply unsustainable. Luckily for the working people of New York, he is determined to do something about it.


  1. Tough Love says:

    Bravo for Gov. Cuomo ! 

    Now Gov. Cuomo, in case you missed it, you ALSO need to end Post-retirement COLA increases.  NOBODY in Private Sector Plans get them and neither should those in Public Sector Plans.

  2. Finibilis Wersackit says:

    Cuomo is no superhero here, and the writers are also being disingenuous or ignorant of the facts.

    Pension costs are neither bankrupting the state budget nor are they unsustainable.  What Mr. Cuomo conveniently leaves out when he discusses their “huge increase” is two things:  the recession and subsequent losses to the trust fund, and the fact that the figures he quotes from 10 years ago were from a period of time when pension contributions were at their record lowest required amount – below 1% of salaries and for all practical purposes at 0% of salaries.

    The figures from today equate to 12% of salaries, all due to the after effects of Wall Streets crash.  The fund itself is performing extremely well, and costs should begin falling within the next year or two provided the market does not free-fall again due to a double dip recession.

    What Mr. Cuomo and the writers don’t tell you is the overall long term cost as a percentage of salaries runs just north of 4% over the last 20-25 years.  Given that even an employer with a poor benefit package will match 401k contributions at a rate of 3% of salaries, and an employer with an average benefit package will match 401k contributions at a rate of very close to 5% of salaries, this is much ado about nothing and just another attack on public sector workers, something that has become popular as politicians, Wall Street, and the wealthy have looked to find someone to scapegoat for the problems they caused.

    Sheeple will believe the authors and Mr. Cuomo.  Anyone who spends a short period of time looking at the facts overall will scratch their head and wonder whether or not we really elected a Democrat to office.

    As far as the cost to the state in terms of overall budget spending, and pensions “bankrupting” the state, pension costs this year amount to less than 2% of overall spending – even at their unusually high current contribution rate – and clearly are not something that is “bankrupting” the state.

    It’s time for people to start looking at the facts, not a bunch of hype thrown out there by a two-bit politician to allow him to keep up with the guy across the Hudson that’s going to be his competition in 2016 for the Oval Office.

    1. Tough Love says:

      What a crock of BS.  You’re obviously a Civil Servant, and either completely clueless (by accepting your Unions lies), or just doing your part to protect your turf.

      Sorry, it’s NOT working ….

      1. Finibilis Wersackit says:

        I tell you what.  If you think it’s a crock – prove any of the facts or figures I just put up there wrong.

        Take the blinders off.

      2. Tough Love says:

        We’ll start with this absurd statement of yours … “What Mr. Cuomo and the writers don’t tell
        you is the overall long term
        cost as a percentage of salaries runs just north of 4% over the last
        20-25 years. ”  They may be “paying in” 4% but that’s a far cry from the full cost.

        Here’s the TRUE cost of 4 typical Civil Servant Plans:

        So let’s cut to the chase …….

        sector employers typically contribute 3%-8% of an employee’s cash pay towards

        retirement, yet the total cost (expressed as a level annual % of cash pay
        throughout one’s career)
        of Public Sector Defined Benefit pensions (for a
        30-year employee retiring at age 55) ranges from
        29% to 58% depending on the
        richness of the benefit formula (with safety workers generally at
        the highest

        specifically, for the noted formulas, the level annual %s of cash pay are as

        2% per year
        of service w/o COLA – 29%

        2% per year
        of service with COLA – 39%

        3% per year
        of service w/o COLA – 44%

        3% per year
        of service with COLA – 58%

        Even after
        deducting the typical employee contribution of about 5% of pay, that still
        leaves the
        employer (meaning TAXPAYERS) contributing 24% to 53% of pay. The
        middle of these %s is
        38.5% vs 5.5% (the middle of the range of what Private
        Sector employers contribute) or SEVEN
        (yes SEVEN) times greater.

        This is
        completely absurd, and the very modest “tweaking” at the edges by practically
        employees for a few more percent of pay contributions will NOT even
        begin solve the HUGE
         financial problem.

        COMPENSATION (Cash Pay plus Pensions plus Benefits) should be comparable in
        Public and Private Sectors for similar jobs, and with Cash Pay in the
        Public Sector now AT LEAST
        equal to (if not greater) than that in the Private
        Sector, there is ZERO justification for greater
        Public Sector Pensions and
        Benefits .

        Not for
        PAST service, but for FUTURE service, Public Sector pension accruals must
        be brought FULLY down to the level of their Private Sector
        counterparts. Due to the huge
        reduction needed, the ONLY way to do this is to
        freeze the current defined benefit plans for
        CURRENT (yes CURRENT) workers,
        and switch everyone into a 401K-style Defined Contribution
        Plan with an
        employer contribution in the same 3%-8% range granted Private Sector workers.

        since Private Sector retirees rarely get any retiree healthcare subsidy
        eligibility for Medicare at age 65, similar restrictions should apply
        to Public Sector retirees.

        TAXPAYERS’ money and Civil Servants are NOT more worthy of bigger pensions
        and better

      3. Finibilis Wersackit says:

        So what in that gibberish that you just wrote refutes anything I said? 
        Not any of it, and most of it is so inaccurate it it reflects a severe
        lack of knowledge on your part.

        For example, you go on to state that a 30 year employee may walk away
        with a pension worth 29% to 58% of their salaries at 55 years old.  It’s
        actually more, figured by an exact formula, and the fact that you get
        this wrong  is a clear indication that you’ve done no research, so it
        severely questions your credibility.

        Those with exactly 30 years of service at 55 years old
        would receive a pension worth 60% of their salary from the NYSLRS.  This
        will incense you even more, because you, like so many others, seem to
        be under the mistaken impression that the taxpayers are directly paying
        those costs.  They are not.  The taxpayers pay into the pension trust
        fund only when the employee is working at the specified percentage of
        salary during that budget year.  When the employee stops working,
        contributions cease.  The cost of the pension is paid for by the
        investment gains made with the money paid in by both the employee and
        the employer during the span of their careers, and as pointed out by the
        NY State Comptroller, more than 85% of  the cost of a pension is paid
        by these gains.  The amount of the principle paid in by the taxpayers
        and the employees is quite small.  Due to the actuarial function of a
        pension, it’s even smaller than the amount of the principle paid in by
        an employee and an employer on a 401k, which doesn’t have those same
        actuarial functions and shared liability.  This is the largest problem
        with the misunderstanding of pensions by the public – they are not
        401ks, are not funded like 401ks, do not work like 401ks, and comparing
        their costs to 401ks is invalid.

        If you have a 401k and die before retiring, that money goes to your
        heirs.  If you have a pension and die before retiring, that money stays
        in the pension trust fund, helping to pay the pension of other
        pensioners.  The same can be said if you die early into retirement. 
        This adds an actuarial value to pensions that is not present in a 401k,
        and cuts costs considerably as opposed to a 401k, because the money in
        the 401k is a backstop for only a single individual and does not share
        the liability with others in a 401k.

        You also imply that there are additional costs because of items like
        COLAs.  What is paid in to the pension trust fund by the taxpayers is
        the cost – period.  When an employee retires, contributions to the trust
        fund for that employee stop.  The cost of the COLA is factored into the
        annual contribution rate paid while the employee is working by the
        actuaries who determine the annual contribution rate.

        As far as your going off on a tangent claiming that total compensation
        to total compensation on a job for job basis that civil servants make
        more than those in the private sector, and that is another reason to cut
        pensions, that is also incorrect.  Numerous studies – such as the one
        issued last year by the SLGE – reflect that on a total compensation to
        total compensation basis when looked at in a job for job, education for
        education basis, reflects public employees are compensated less than
        their private sector counterparts in all but the lowest level unskilled
        positions.  In fact, professionals of any kind in the public sector
        usual reflect huge disparities when compared to the private sector.  Theres a reason for the old adage that you don’t get rich in the public sector – because it’s true.

        In all reality, the end of your post sums up your real issue.  Sour
        grapes, and a desire to be a “useful idiot” in the service of those that
        sell you bogus information.  To sum up, you complain “but the private
        sector only gets this, why should someone else get something
        different?”  The fact of the matter is the private sector is all over
        the board.  Some people get nothing – not even a 401k match from an
        employer.  Others may get a pension that is fully funded by the employer
        and at a percentage of salary that far exceeds what is received by a
        state employee.  The private sector is not one cohesive unit where
        everyone gets the same thing.  To claim otherwise is asinine. 

      4. Tough Love says:

        Quoting …”For example, you go on to state that a 30 year employee may walk away
        with a pension worth 29% to 58% of their salaries at 55 years old.”

        You so brilliant, you can’t even read something and understand it.  The 29% to 58% is the level annual cost (i.e., the annual contribution) expressed as a % of cash pay, necessary the FUND the resultant pension …. not the payout level.

      5. Finibilis Wersackit says:

        As the annual contribution amounts as a percentage of pay are post online by the NYS Comptroller, can you point me to where it reflects contribution amounts of 29% to 59%?

        This years contribution rate is 11.9% – and that’s the highest it has been in decades.

        Again, you don’t bother researching before speaking and instead choose to play the useful idiot.

      6. Tough Love says:

        Ah, now we’re talking……..   NYC and virtually all states and cities aren’t PAYING the full level % of pay necessary to fully fund a worker’s pension during their career.  That (along with a lousy stock market of course) is WHY most states and cities have unfunded liabilities.  Use phony GASB accounting rules, they admit to funding ratios in the 60-80% range.  However if the FASB accounting rules applicable to Private sector Plans were used (which just about ALL economists feel to be MUCH more appropriate), these ratios would drop by about 20%.

        NYS may be “contributing” only 11.9% …… but to fully fund the Plans it needs to be contributing the %s I listed above.

      7. Finibilis Wersackit says:

        New York state is paying the full amount required, and the plan is over 100% funded.  The state is required by the state Constitution to make said payments every year.  Again, the rates are posted online for all to see, as well as the financial statements.  That you ignore them is simply cognitive dissonance.

        Now if you want to discuss the pensions of other states, that do not make the required contributions are are not fully funded, that’s a different story.  For example, New Jersey has not made contributions or has made token contributions for years.  Now with Christie looking to change benefit levels to current employees as well as retirees, and not just future employees, it’s basically like the state is robbing those employees of promised compensation.  Should your employer be able to come back and confiscate your 401k after the fact?

      8. Tough Love says:

        Re you next to last sentence …….

        Christie is ONLY looking to reduce the rate of accrual for FUTURE years of service.  Doing so is both allowed and routinely done in Private Sector Plans when the financial circumstances make it necessary.  This is exactly the current situation we are now in with Public Sector Plans.  So why should Civil Servants be afforded protections and advantages not available to Private sector workers …. are you “special” and deserving of more than those (the Private Sector taxpayers) whose contributions (and the interest earned thereon) pay for 80-90% of YOUR pension??

      9. Finibilis Wersackit says:

        You might very well want to look at Christies plan again.  Apparently you didn’t get the memo.

        As far as what the taxpayers should be paying civil servants, we have a choice:  We can raise their salaries to be competitive with the private sector and ditch their pensions, or we can continue to offer them pensions, keep salaries a bit lower than what is expected in the private sector, and let people decide if the trade off of future security outweighs the desire for immediate gratification.

        Offering pensions in liu of higher salaries saves money.  If particular position in the private sector starts at $75k-$85k a year, and the state pays $50k-$65k depending on years of service but the employees are willing to work for that lower salary amount in exchange for a pension, we’ve already saved money.  Even at the upper pay rate of $65k for the state employee, and with the $7800 added in for this years pension contribution, that’s still $3k below the starting rate of the private sector employee – not even counting the cost to the private sector employees firm for their 401k match if they offer one.  It also ignores that the private sector worker is just starting out, while the state employee at that pay rate has worked for the state in that position for numerous years already.  Measured starting salary to starting salary, the savings are even greater.

        So as a taxpayer, I choose not to hold a case of pension envy over someone else simply because someone may have something I don’t.  So as to how my tax dollars are spent  – total compensation cost is more important than crying over what it’s spent on.  You however, are entitled to continue throwing a hissy fit if you choose.

      10. Tough Love says:

        Apparently YOU missed the memo, since with the exception of a few highly professional occupations such as doctor, lawyers, and certain IT professionals, “Cash Pay” in the Public Sector now exceeds that of comparable Private sector jobs.  Add in the universally MUCH MUCH greater Public Sector Pensions and Benefits, and “total compensation” in the Public sector far exceeds that in the Private sector.  This is completely unnecessary, and grossly unfair to taxpayers.

        I’m still not sure if you are indeed as clueless as you appear, or just a good liar.

      11. Finibilis Wersackit says:


      12. Tough Love says:

        You’ve go quite a following of readers who “like” your comments.  Care to make a wager that every one is a Civil Servant (or has a family member who is) riding the same gravy train as you ?

      13. Finibilis Wersackit says:

        I’ll take that as your way of saying “Uncle”.

      14. Tough Love says:

        Not a chance.  You’re either clueless or an accomplished liar.

      15. Finibilis Wersackit says:

        Given that you’ve yet to provide any evidence that any of what I’ve said has been wrong, I digress.

        At the same time, you’ve yet to provide us with even one factual statement.  Who’s paying you?  The Koches?  At a penny a post, you’ve got a long way to go to earn this weeks paycheck, eh?

      16. Tough Love says:

        Finibilis,  I opine on these comments to help right a wrong , the enormous financial rape of the taxpayers via the collusion between Civil Servant Unions and elected officials, resulting in “total compensation” (pay + Pensions + benefits) far in excess of what Private Sector workers in comparable positions earn.  I do this via posting correct factual information (yes, it is) and hoping those WITH the power
        to change things will latch on, better understand, and work for that
        badly needed change.

        I understand where you are coming from, and I too would likely do my part to protect my turf if I was in your position … e.g., the deceit and misinformation campaign,  blaming the millionaires, and always thinking that more taxes is the solution.  Greater taxes is not the answer as it is extremely destructive to the economy.  The Public Sector must live within it’s means via significant reductions on the EXPENSE side of the income statement.

        Your efforts and those of your supporters are failing.  Example NJ, which just yesterday passed a Senate bill to mightily increase healthcare premiums and reduce pensions … including the elimination of COLAs for all CURRENT workers.  While the effected workers kick and scream, we (the taxpayers), know that even AFTER these changes , their compensation package is STILL better than ours.  The lies and misinformation never ceases.

        You can lie, you can misinform, you can rally, and you can attempt to delay change, but … the math is the math.  You can’t get around that.  There will never be sufficient funds to pay anywhere near what was “promised”.  Either all will need to get significant pension & benefit haircuts, or all but those already retired will get next to nothing as the funds run dry.

      17. Truth Seeker says:

        Having read your responses, I would have to agree that Finibilis has taken you to the woodshed.  Finibilis has made clear, concise points and noted where the information comes from.  You have made overly broad generalizations and gross mischaracterizations – both unsupported while claiming them as “fact”, along with adding the typical rhetorical responses expected from someone on the right when they have no real answer.  “Stealing”, “Bankrupt”, “Rape”, etc.  You might as well go ahead and go for the gusto and provide other typical responses pointing out how unions/public workers/liberals are “communists”, “nazis”, “thugs”, “marxists”…

        If this was a scored debate, your opponent would have handily wiped the floor with you.

      18. Tough Love says:

        Time will tell if, as I say, the math is the math, and all the lie and misinformation will not change that.  If (as I’d guess) that you are a Civil Servant, I strongly suggest you save for your retirement independent of your gov’t Pension …. you’ll likely need it.

      19. Finibilis Wersackit says:

        Thank you.  Much obliged.

      20. Finibilis Wersackit says:

        Well, looks like the discussion is now moot because Tier VI is dead this session as of the latest info in the press.  Here’s a tissue.  I’m going to take my leave now.

        And BTW – for all of your grandstanding, you still haven’t offered one iota of evidence to back up anything you’ve said.  But hey, I’m sure you earned your paycheck as a paid talking point troll though, right?  That’s something at least.

        The “Like” you see on that last post was me not paying attention and clicking the wrong button to respond.  Don’t get your hopes up that you have followers.

      21. Tough Love says:

        Just have to ask … is that really your name (wow)?

      22. Finibilis Wersackit says:

        Your (ignorant) point?

      23. Finibilis Wersackit says:

        Wait for the link I just posted to pass the moderators gaze.  Or simply Google “SLGE Out Of Balance” and go read the study.  You’ll find once again your assumptions are incorrect.

        While yourself and people like yourself refuse to accept it, the public
        sector, including their benefits – generally make less.  Your posts are
        a  perfect example of cognitive dissonance – the facts are all there in front of you,
        presented to you in an intelligible way, and you continue to ignore them because acknowledging them will prove you wrong and hurt your ego.

      24. Finibilis Wersackit says:

        And as far as the FASB as opposed to the GASB, even in that case, New Yorks plans are over 90% funded, and actuaries consider “fully” funded to be anything over 80%.

        So the FASB versus GASB argument is nothing more than another canard.

      25. Tough Love says:

        All discussions of “funding” relate to already accrued benefits (not those earned for future service).  If Plans are to be fully funded when the employee retires (which IS the appropriate goal) Plans should always be targeting 100% funding of accrued benefits (not 80%).  I have heard plenty of elected officials quote that 80%, but never an actuary, because they know better. 

      26. Finibilis Wersackit says:

        Of course, you still disregard that it is, in fact, over 100% funded.

        Seriously?  Is this all you have?  FASB versus GASB?  Go look up the FASB estimate for the trust fund here in New York.

        Just give up.  You lost.  Admit it.

      27. Tough Love says:

        I do not know NY’s funded ratio, but whatever they publish (based on GASB accounting), under FASB its likely 20% lower.

      28. Finibilis Wersackit says:

        So you based this on your own personal assumptions with nothing to back it up?  That’s plush.

        Again:  Quit being the useful idiot.

      29. Tough Love says:

        Had to step away …

        To make it simple (since you are ovbviously clueless as to how pensions work and how they funded) ….. there are ONLY 2 sources of contributions, the employee and the employer (meaning taxpayers).  Investment earnings derive FROM these contributions, in the absence of which there would be no investment earnings.

        Here’s the point:

        If you took each employEE contribution and accumulated it with investment income (say using the rate earned from a balanced portfolio of fixed and equity investments over the employees career) to the employee’s retirement date, the sum of these accumulated contributions would on average be sufficient to purchase a COLA-adjusted annuity of 10-15% of the actual annuity the employee will receive.  The 80-90% balance is funded by the TAXPAYERS contributions and the investment earnings thereon.

        Now, do I expect you to accept this (let alone understand it) … no.

      30. Finibilis Wersackit says:

        So, because the taxpayers fund the principle, the interest belongs to the taxpayers too, and that amounts to the taxpayers directly paying out a pension check out of their pockets?

        The taxpayers cost is the principle that they pay via contributions – that’s it.  The interest is not tax dollars nor is it the taxpayers money.  That’s akin to saying the money in your 401k is actually your employers money because they made a matching principle contribution.

        Your logic is astoundingly asinine.

      31. Tough Love says:

        The investment earning should rightfully be associated with the share of the Pension’s total cost paid for by employees and taxpayers.  If the taxpayers’ contributions are ultimately called upon to pay about $7 for each $1 of employee contributions (which they are), then 7/8 of the total investment income is derived from the taxpayer’s contributions.

        The point being that had taxpayers not been forced to pay these excessive contributions, then that investment income as well as the their $ contributions would have stayed in THEIR pockets.  To disassociate the source of the investment income and say that your Plan is magically paid for by some 3-rd party source is ludicrous.

        I suggest you take a few finance classes at your local college.

      32. Finibilis Wersackit says:

        I would hardly call something that averages a 4% contribution rate “excessive”.

        And again, I digress that the investment earnings are a cost to the taxpayer or belong to the taxpayer.  Again – do the investment earnings of a 401k funded by an employers match belong to the employer?  I didn’t think so.

        Idiotic comments like this by useful idiots like yourself are exactly the problem.

    2. Truth Seeker says:

      Bravo. An excellent summation of what’s going on and how the powers that be are being less than honest.

    3. Truth Seeker says:

      Bravo. An excellent summation of what’s going on and how the powers that be are being less than honest.