Cuomo: Pension Spiking is ‘Fraud’ (The Non-Illegal Kind)

Holding his sixth press conference in the past 10 days (three of which were weekend/holiday), Attorney General Andrew Cuomo today turned to pension spiking, the practice of public employees boosting overtime hours in the last years of employment to increase their post-retirement pensions.

He’s been critical of the practice before, and today he released a report on 50 counties, cities, agencies, and other public employers to find that this practice is, as suspected, quite widespread. The survey found that 28 of 50 public employers that the AG’s office looked at showed boosts in overtime in employees’ last years of work.

Cuomo repeatedly referred to the practice as “fraud”:

“You have some people who work no overtime throughout their career and then the last year or the last couple of years, all of a sudden, do hundreds of hours of overtime just for purposes of increasing the salary and increasing the pension. That is not an agreed to cost. That is not what was fair and right. That’s a fraud and that’s what we’re looking at.”

But that’s not entirely a fair term, at least by the typical definition thrown around by attorneys (meaning an illegal practice).

Unlike, say, racial discrimination by landlords (the subject of yesterday’s daily presser), the attacks against pension spiking are made a bit more complicated by the fact that pension spiking is, in fact, completely legal. Employees are simply playing by the rules, and if that means they work a lot of overtime in their last year, that is well within the bounds of legality.

Cuomo later acknowledged that the employees are generally not committing illegal acts, and backpedaled a bit, saying there is “criminal fraud—capital ‘f’ fraud—and small ‘f’ fraud.”

“Criminal fraud, I think, would only be the egregious case,” he said. “Do I consider the practice a fraud on the taxpayers—small ‘f,’ non-criminal fraud? Yes.”

Terminology aside, Cuomo is clearly making pension spending a big issue. At the event, he opened with the refrain, “Welcome to the new economic reality that is New York.” In his gubernatorial policy plan, he has proposed scaled-back benefits for new employees—”Tier VI”—and seems to recognize that, like many other states, the pension system will be a tremendous drag on New York in the long-term if it is not overhauled (a big problem, from the point of view of cost-savings, is that benefits for existing employees are locked in forever).

Almost all of the remedies, of course, are legislative, and will surely be an uphill fight should he try for major reforms, should he be governor. 

 

Cuomo: Pension Spiking is ‘Fraud’ (The Non-Illegal Kind)