County Executive Robert P. Astorino lent his support recently to New York Atty. Gen. Andrew Cuomo's effort to get a handle on whether some government employees are padding their pensions.
"Pension costs are soaring here in Westchester, just as they are statewide," said Astorino. "It is imperative that we bring these costs under control."
At a news conference at Manhattanville College in Purchase, Cuomo announced he has broadened his fact-gathering effort he began three years ago to include a total of 39 government entities (counties, towns, fire districts etc.) including Westchester County government. He is seeking payroll information and related data for pension recipients from these entities in particular because they have extraordinarily high pension costs.
"Westchester County is facing a $166 million deficit, and skyrocketing pension costs are a major contributor," said Astorino. "In the next three years, Westchester's pension costs are projected to more than double from $55 million to $118 million. That's just not sustainable. Taxpayers are already at their limit. Structural reform is needed. Abuses must be stopped. Reform can't wait. I look forward to working with Attorney General Cuomo on this issue and on other initiatives to help New York's taxpayers."
Under state law and the state Constitution, public employees are guaranteed a pension based on the number of years they have worked for the government and their final income, including in some instances overtime.
Although pension costs typically make up only about 2 percent of expenditures in cities, towns, counties and villages, in certain localities pension costs represent over 7 percent of expenditures. Cuomo's inquiry is aimed at determining why counties such as Westchester are on the high-end of this expenditure.
"Pension padding" or "pension spiking" is the practice of manipulating salary and overtime payments to acquire inflated pensions at the expense of taxpayers. In many instances, there is nothing illegal about this.
"In the midst of this financial crisis, as we are all trying to do more with less, it is essential that every system in New York operates as efficiently and effectively as possible," said Cuomo. "My office continues to support the pension system and values the hard work that public employees do on behalf of the state. If any abuse exists in the pension system, however, it is important that it is purged and that taxpayer dollars are protected."
According to recent census data, New York State had an overall pension cost of $486 per resident in 2007, which was the highest in the nation. The New York State Common Retirement Fund ("CRF"), which funds the Employees' Retirement System ("ERS") and the Police & Fire Retirement System ("PFRS"), has assets of more than $129 billion and covers more than 1 million members and retirees from more than 3,000 government employers. The CRF is primarily funded by taxpayers who pay an estimated $2.5 billion to the fund each year.
Statewide, pension payments to retirees in ERS and PFRS have increased from $3.5 billion in 1999 to more than $7.3 billion in 2009. New Yorkers end up bearing the burden caused by excesses in pensions through increases in their property taxes. New Yorkers already face some of the highest property taxes in the nation.
In light of these rising pension costs, state and local employers will be required to make significantly higher contributions to fund the state pension system starting in 2011. For public employers participating in ERS, their mandated contributions will increase from 7.4 percent of payroll to 11.9 percent; for those participating in PFRS the costs will go from 15.1 percent to 18.2 percent.
According to Cuomo, there is currently a striking variance in levels of retirement benefits paid across the state. The average annual public pension payment in New York State is approximately $25,000, but some individuals receive pension payments exceeding $300,000 per year and some end up receiving more in pension than they received in salary.
Here are some examples:
- A water department worker took in more than $30,000 in overtime and extra pay in addition to his $40,000 salary for a total salary of almost $74,000.
- An animal control officer took in more than $19,000 in overtime in addition to his $38,000 salary for a total salary of more than $57,000.
- A police officer earning a base salary of $74,000 took in $125,277 in overtime in his final year, bringing his total income to almost $200,000. Based on this inflated final year's salary, he then received a $101,333 annual pension.
- A sanitary district official saw his annual salary increase from approximately $150,000 to over $200,000 through raises, bonuses, and special payments.