Vote Today on NY Public Pensions?

STUMP today focused on Pension-Related Ballot Measures: 2017 which linked to:

  1. New York State Proposal 2: Forfeiture of Pension of Criminal Officials
  2. Maine Proposal 4: extending from 10 to 20 years the period to pay off unfunded liabilities
  3. Houston $1 Billion Pension Obligation Bond

But after listening for a few minutes to Bernie and Sid this morning it may be that a ballot question in New York will have a massive impact on public pensions in that state…and possibly the nation.

New York State Proposal 1 calls for holding a constitutional convention to develop and propose changes to the state constitution that voters would vote on at the election on November 5, 2019.

Labor unions are against the proposal citing the $150 million cost of the convention and spending $50 million to do it (according to Bernie and Sid).

But what does this have to do with public pensions? The United Federation of Teachers explains:

The second reason to oppose a constitutional convention is that even if it is convened for a given purpose, say governmental ethics or the environment, the delegates are allowed to consider any matter they want. So, even if the public votes for a convention based on issues that sound legitimate, the convention itself can switch gears and review any aspect of the state constitution. Yes, even public employee pensions.

To wit: There is a provision from the 1938 state constitution that says, “… no public employee pension shall be diminished or impaired … .” That is the constitutional protection and guarantee for our pensions that exists in this state and to some degree in several other states.

What is guaranteed for us? Our basic defined-benefit pension is guaranteed. The fact that our pensions are not subject to state taxation is guaranteed. The 7 percent investment return on our TDA is something we have been prepared to go to court to defend as constitutionally guaranteed.

You’ve seen the push in recent times to move to 401(k)-type defined contribution pensions and you know what a disaster that would be.

Would such a convention try to replace existing defined-benefit pensions? Perhaps not. But it could “diminish” or “impair” certain aspects of them. Just last year, the state of Illinois tried to do so and retirees saved their pensions only by going to court.

Suppose the convention inserted an innocent-sounding proviso that only in times of fiscal crisis or budgetary catastrophe could any guarantees be modified. Who would decide when such a fiduciary dynamic existed? The Legislature? The governor? A fiscal review board? Would you want your pension subject to year-to-year political ups and downs? I think not!

All items drawn up by a convention then have to appear on the next general election ballot for an up or down vote. To fight any changes adversely affecting us would require a massive campaign at great cost at a time when the U.S. Supreme Court is likely to entertain another Freidrichs-like case that could cripple the ability of a union to collect dues. A multi-year campaign would be a disaster for us.

The best way to protect our pensions is to defeat the initial question when it appears on the November 2017 ballot. And don’t be lulled into any idea of an easy success. The public right now approves of a New York State Constitutional Convention by almost 70 percent. It sounds so democratic, especially in the face of the state government corruption cases brought constantly before our eyes.

6 responses to this post.

  1. Just FYI — the ConCon measure is deeply unpopular in the state, and Cuomo dropped his backing.

    http://www.nydailynews.com/news/politics/cuomo-won-voting-constitutional-convention-article-1.3615512

    So yes, theoretically #1 would affect pensions… but it ain’t gonna, because it’s not gonna pass, a ConCon wouldn’t pass such a measure, and it would have to go back for a vote (which wouldn’t pass)

    Reply

  2. Posted by Tough Love on November 7, 2017 at 1:17 pm

    Oh my, they have a Constitutionally guaranteed ……….. “7 percent investment return on our TDA”

    If NY’s Private Sector citizenry has any common sense they would ALL vote for the Constitutional Convention and pressure their representatives to eliminate EVERYTHING in NY’s Constitution that guarantees something to Public Sector workers where a guarantee of equal magnitude does not exist for comparable Private Sector workers…… i.e., those that pay the bills !
    ***********************************************************************

    EQUAL, but not better ……….. on the Taxpayers’ dime.

    Reply

  3. Posted by Anonymous on November 7, 2017 at 5:42 pm

    The TDA investment guarantee is 8.25 percent for non-UFT members of TDA and 7 percent for UFT members. These fixed rate options have been around since 1989.

    With that said, this borrowing scandal could not be reality if the City of New York borrowed at the municipal bond window rather than borrow the private retirement savings (TDA/403(b) of its active and retired educational employees.20 THIS SPECIFIC CITY OF NEW YORK DEBT IS $ 20 BILLION DOLLARS PER YEAR AND GROWING EACH AND EVERY YEAR!!

    Reply

  4. Posted by Anonymous on November 7, 2017 at 5:54 pm

    note: The New York State Constitution does not guarantee these rates and has absolutely nothing to do with the setting of these guaranteed investment returns which is the sole responsibility of the New York State Legislature.

    Question for John: In your opinion which is the more powerful union lobby, the New Jersey Education Association (NJEA) or the United Federation of Teachers (UFT)?

    Reply

    • Don’t know anything about UFT and very little about NJEA but my guess is NJEA since I can’t imagine NY politicians being so easily bought. Though we will know more about NJEA clout in a few hours.

      Reply

  5. Posted by Anonymous on November 13, 2017 at 10:11 am

    JB:

    If they were not bought then what is the trade off for the City’s agreement to borrow the 403(b) funds ($20 billion) of the City’s Teachers’ Retirement System at 7/8.25 percent interest?

    With that said, retired NYC cops, firefighters and correction officers receive annual cost of living increases as do all retirees. Additionally, only the Cops, Firefighter and Correction officers are guaranteed an annual Christmas bonus of $12,000 for life.

    Reply

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