There is no public pension crisis in New York City or New York State, writes Harris Lirtzman, former Director of Risk Management for the New York City Retirement Systems in the NYC Comptroller’s Office from 1996-2002 and former Deputy State Comptroller for Administration from 2003-2007, on the blog Perdido Street School. Anyone who is trying to conjure a “pension crisis” is willfully ignoring facts, writes Lirtzman.
He says:
New Jersey, Illinois, Michigan and Rhode Island are the states with the most significant actual pension problems, verging on “crises,” caused almost entirely by years and years of the state failing to make mandated minimum employer contributions to keep their pension systems solvent. New York State and New York City are awash in cash as tax revenues from soaring sales of residential and commercial properties roll in and personal income and sales tax proceeds exceed every recent projection and are making current contributions to their pension plans.
In 2013, the New York City Teachers Retirement System (TRS) was funded at approximately 63% of accumulated retirement benefit obligations and earned 11.9% on its $38.3 billion investment assets. In 2013, The New York State Teachers Retirement System was funded at approximately 88% of accumulated pension obligations and earned 13.7% on its $82.7 billion investments assets. There is no pension “crisis” in New York City or New York State that would warrant, even by the Post’s own credulous standards, the sort of panic that such an article will engender.
No politician in New York City or New York State will take on public pension fund systems directly by attempting to reduce the benefits paid to current retirees or accruing to current employees. They cannot do that because pension benefits are a constitutional obligation of the State of New York and a contractual obligation of the City and State as employers.
The only time that a state constitutional protection has been abrogated other than by some change in the constitution itself occurred two years ago in Detroit, when a federal bankruptcy judge, relying on long-standing precedent, ruled that the Michigan State constitutional protection against the diminishment of already accumulated pension benefits does not apply when a municipality of the State, in this case, Detroit, declares bankruptcy.
Neither New York City nor New York State is approaching bankruptcy, and there is no pension crisis in the city or state. Period.
Diane Ravitch's blog 
I don’t know if this is how I can send an interesting article…but this is from NJ and is the latest in a growing concern from students, teachers, and parents re: testing Debbie Greh
http://teacherbiz.wordpress.com/2015/01/08/newsflash-nj-superintendents-are-allowed-to-accommodate-parcc-refusals/
Sent from my iPad
>
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NYSTRS’ Comprehensive Annual Financial Report – http://www.nystrs.org/main/library/annual-report.htm
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Just like there is no social security crisis. Does it need tweeked? Sure, but this is all about destroying any publicly negotiated pensions & social safety nets. A lot of very wealthy and their foundations are behind these movements. They have been at this for decades. Manufactured crises in all these areas.
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As a recipient of the New York State pension fund, I am very concerned that these Wall street tycoons will try and get their hands on the funds. They have been well maintained by Democrat comptrollers over the years and as such are quite solvent.
This is just another ruse to scoop up earned funds from retirees , both current and future for the greed of others. We paid into this fund over many years of service. Leave it Alone.
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What is concerning is that the governor probably has Wharton trolls actively looking for loopholes in the pension structure. The pension is definitely on his radar, if he is making references to it in his speeches. Beware of the hedge fund strategies that allow him to move money from one fund to another, and then declare a “crisis.” He already has the press cued up and waiting to publish the manufactured crisis.
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63% of future obligations is considered actuarially sound? I guess if you count on getting 11% every year.
One wonders, then, why there has been an explosive spike in the amount the DOE spends every year on pensions, money that is directly diverted from what could be going to classrooms.
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Tim, ask former Mayor Bloomberg, who multiplied pension obligations
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How?
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63% is not bad in this day. So, the going standard is to be 80% funded, but lots of retirement think tanks will tell you that that is just a made up percentage. It’s more important for the retirement system to be actuarially sound – which means the state (or entity) must make contributions that cover the normal cost of providing benefits as they occur and the cost of amortizing unfunded liabilities over a 30 yr period or less. In other words, it’s more important for the system/state/municipality to have a plan for paying the debt and to make those payments.
A majority of state retirement systems were on their way to being fully funded or close prior to the economic downturn/investment losses of 2008.
The investment losses caused the unfunded liabilities to increase, causing the “explosive spike” in pension payments – ret. systems are having to pay more in their UAL costs to cover the increased debt. However, the normal cost (the amount needed to cover benefits as they accrue – or the actual cost of a teacher’s retirement benefit) is actually going down significantly with the recent investment gains experienced in most states.
And, don’t forget, teachers pay their share of the normal cost of their benefit – in defined benefit plans, they don’t have a choice as the % is set by lawmakers and taken right out of their checks. In many cases, the employer’s portion of the normal cost is less than the employee pays and less than they would pay for Social Security coverage (6.2%).
For example, in La., employees pay 8% in normal cost. Employers pay 5.25% in normal cost for FY 14-15. The employer portion of the normal cost is set to decrease to 4.36% in FY 15-16 while the employee will still pay 8% of salary. Thus, the employee will pay almost double what the employer pays for his retirement benefit next year.
I haven’t studied NY’s pension system, but likely the explosive spike of which you speak has more to do with still covering those investment losses and less to do with retirement compensation for teachers. Of course, if your DOE hires more and more administrators with 6-figure salaries, that will help to inflate the normal cost of retirement, but you can hardly blame the regular K-12 teacher for those extra costs – nor can you blame a teacher for investment losses that they had absolutely no control over.
Then you have state’s like NJ that don’t make the payments they are legally required to make, continuing to increase their unfunded liabilities – is that the teacher’s fault? Or states like La. that started its teacher retirement system in the 1930s and paid nothing into it for years, creating a UAL from inception. Again, do you begrudge teachers their pensions that were promised as part of their overall compensation package because lawmakers chose to direct money to their slush funds instead of retirement systems?
And, let’s not forget that there are lots of other pots of $$ that could go toward the classroom – if lawmakers had the political will to do it (which they haven’t shown in my lifetime). You’d be surprised just how small the percentage of the state’s budget actually goes into those pension payments.
For those states that do stick with their payment plan, they will start seeing a drop in the overall amount paid toward retirement barring any future unforeseen economic disasters, which means Wall St. must be regulated.
It sounds to me like you don’t think teachers should receive a pension? With the average teacher pension in La. at a whopping $24,500 a year, they aren’t living the high life after 30-years of hard work, and in fact, almost 39% of La.’s teacher retirees receive a benefit that is below the poverty level for a family of two. I wonder how you feel about government programs like welfare and food stamps because that is exactly where retired teachers would end up if they did not have a defined benefit pension. And, don’t get me started on 401(k)s as that is the biggest pension scam perpetrated in this century.
I could go on, but you get the point…
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The 63% figure is the actuarial funded ratio for the NYC teachers fund.
New York passed two big (and many other smaller) retroactive pension enhancements during the 2000s. I can’t tell you exactly how much of the spike in NYC’s costs was due to those benefits enhancements versus investment performance, but it is a significant amount.
I vaguely recall that one of the two enhancements, a COLA, has added around a billion dollars a year. The other one was an early retirement incentive passed in 2007 or 2008. Dr. Ravitch is presumably referring that one she writes that “Bloomberg multiplied pension obligations.” (More accurately, it was Bloomberg, Randi Weingarten, the NY legislature, and Eliot Spitzer.)
New York State’s teacher pension fund is in much better shape than NYC’s.
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“A promise made is a debt unpaid.”
Not an algorithm. A value. The owner of this blog wrote this some time ago in order to remind us of what really, not Rheeally, counts.
Management by fear. Colossal failures and world-class incompetence like $1 billion plus for iPads and MISIS, news of which travels round the world to inflict deep and lasting damage on public education. Reckless bullying and firing of able teachers like Ms. Patrena Shankling. Thy name is John Deasy.
The old saying is scrupulously observed when you’re a charter member of the education establishment. Even when you should feel morally obligated to return 3 1/2 years worth of salary for a job [in]famously and ruinously done, the consequence is:
“As part of the departure agreement, Deasy is expected to receive about 60 days’ pay, or roughly $60,000, the sources said. His contract, which was to run through June 2016, requires a severance payment of only 30 days.”
Link: http://www.latimes.com/local/la-me-1016-deasy-resigns-20141016-story.html
Guess that money is never going to make its way into the classroom.
But those actually doing their jobs? Doing them well? Working under miserable conditions with inadequate support?
Don’t expect anything for your hard work, skill, and dedication under unnecessarily trying circumstances. Because it’s all about the kids, you greedy, overpaid, underworked and lazy LIFOs.
For those of you on Planet Reality aka Earth, remember that one of the fundamental aims of the self-styled “education reform” movement is to reproduce conditions on their home planet aka Rhee World née Bizarro World.
Yes, Bizarro World. As I wrote in a comment on this blog of two days ago, quoting from wikipedia, it’s a place where everything is “weirdly inverted or opposite of expectations.” For example, like all promises to the advantaged and undeserving are to be honored while all promises to the disadvantaged and deserving are to be broken.
Or where the highest form of morality is to “comfort the comfortable and afflict the afflicted.”
Not high on my list of places I want to visit…
😎
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You got it right, but that does not mean that the ranters who are hollowing out the government (Naomi Klein’s book) won’t try to bankrupt as many cities as possible. The GOP was in charge of Congress for one day, an the put ending social security at the top of their agenda, next to banning abortions.
only 14% of the people approve of that these chartletons do, but they do it anyway.
http://billmoyers.com/2014/12/19/web-extra-new-robber-barons/
and the ranter in chief in NY:
http://www.wgrz.com/media/cinematic/video/21220797/cuomos-teacher-pension-comment-draws-criticism/
or
http://krugman.blogs.nytimes.com/2015/01/06/the-record-of-austerity/?emc=edit_ty_20150107&nl=opinion&nlid=50637717&_r=0
orhttp://www.nytimes.com/2015/01/03/opinion/a-republican-ruse-to-make-tax-cuts-look-good.html
and the reality of the Dark Money, that pushes our congress, our supreme court, all out elections, our media and determines what is done or not done in this country..
http://billmoyers.com/2014/09/22/5-signs-dark-money-apocalypse-upon-us/?utm_source=General+Interest&utm_campaign=94370722aa-Midweek_0924149_24_2014&utm_medium=email&utm_term=0_4ebbe6839f-94370722aa-168347829
We the people have to elect people like Bernie Sanders, and Liz Warren to lead our country , so that maybe, the Secretary of Education will be Diane Ravitch… I scan dream can’t I?
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Cuomo is setting up calling for a Constitutional Convention in 2017. That’s when the so called reformers plan on finalizing their takeover of state assets.
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Pensioner spending and, the state and local taxes, paid by them, enable many communities to survive. Pensioners, the majority of whom, after retirement, remain where they worked, are a reliable stream of revenue for state, cities, villages and townships. They prop up residential real estate, as well.
Assuming the continuation of the despicable trend of reducing state tax rates for the wealthy, the elimination of private pensions and, the corporate outsourcing of jobs, the 99% can lessen the harm inflicted on them, by demanding an economy, in part, fueled by public pensioners and Social Security.
Economists, other than Klugman and Baker, construct scenarios, that conveniently ignore macro financial benefits accrued from tenure, pensions and Social Security.
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So who overlooks the TRS when deciding who gets an accidental disability pension or regular disability pension? Why should it be said to a person who gets hurt in their own school after working almost 20 years in the same school the right to say, “due to 9/11 hardly anyone gets approved for accidental disability anymore. That’s horrible and in my case I was denied accidental disability by a few ” so called doctors” that look and need to be getting lots of staff developing and refresher courses in there field!! Who over sees these people in cases such as this. No one!! Your life can be destroyed in an instance and no one, I mean no one, at the Dept of Education, the UFT or the TRS of New York really cares about the teacher in the long run!!! I’m living proof!! It was done to me very recently. Everybody has a hand in everybody’s pocket these days and now I truly see and believe the corruption that goes on! I’m still trying to find someone out there to help me get the pension that I deserved after dedicating my life to a job I loved and lost because of a fall in school over school lunch that left me with severe medical issues and now severe economical issues. I’m tired of crying for help. There’s no one who is willing to help. If there’s no problem with money for pensions then why am I being cheated out of mine?
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Dear Margarite… and all you teachers shocked at what is happening to you.
In 1998 I was celebrated teacher http://www.opednews.com/author/author40790.html
when the UFT let them come after me. Have told that story here. often.
have been publishing, here,/ this link to an essay I wrote in 2004, almost 12 years ago, and the harassment still continues.
http://www.perdaily.com/2011/01/lausd-et-al-a-national-scandal-of-enormous-proportions-by-susan-lee-schwartz-part-1.html
The assault onto professional worked. No accountability for what happens to teachers. Period
I put this up often, because Loran Stremchas; story is THE story that shows what LAWLESS CAN DO, when civil rights for teachers do not exist’
https://www.youtube.com/watch?v=bGMBKF2UMq4&feature=em-
her book will tell you everything ting you need to know about the war on teachers.
https://www.linkedin.com/pulse/background-information-bravery-bullies-blowhards-lorna-stremcha
But if that is not enough , go to Perdaily.com, and read the chronicle of on man who tells the tale of LAUSD, when the union looked the other way,
http://www.perdaily.com/2014/03/lausd-and-utla-collude-to-end-collective-bargaining-and-civil-rights-for-teachers-part-2.html
and thousands of teachers bit the dust. http://www.perdaily.com/2015/01/were-you-terminated-or-forced-to-retire-from-lausd-based-on-fabricated-charges.html
http://www.perdaily.com/2014/06/lausds-treacherous-road-from-reed-to-vergara–its-never-been-about-students-just-money.htmM
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