Costly Promises
The Reckoning Upstate

This is the fourth article in a series examining actions of state and local governments that have left taxpayers with large unpaid bills for public employee pensions. The series focuses on ways in which pension funds have been shortchanged by government officials even as they have sought to enhance benefits for groups of politically influential workers.

Public Pension Plans Face Billions in Shortages

In 2003, a whistle-blower forced San Diego to reveal that it had been shortchanging its city workers’ pension fund for years, setting off a wave of lawsuits, investigations and eventually criminal indictments.

The mayor ended up resigning under a cloud. With the city’s books a shambles, San Diego remains barred from raising money by selling bonds. Cut off from a vital source of cash, it has fallen behind on its maintenance of streets, storm drains and public buildings. Potholes are proliferating and beaches are closed because of sewage spills.

Retirees are still being paid, but a portion of their benefits is in doubt because of continuing legal challenges. And the city, which is scheduled to receive a report today on the causes of its current predicament, still has to figure out how to close the $1.4 billion shortfall in its pension fund.

Maybe someone should be paying closer attention in New Jersey. And in Illinois. Not to mention Colorado and several other states and local governments.

Across the nation, a number of states, counties and municipalities have engaged in many of the same maneuvers with their pension funds that San Diego did, but without the crippling scandal — at least not yet.
more–>

New York Gets Sobering Look at Its Pensions

Every year since 1999, New York City has reported that it has all the money it needs to pay for the pensions that have been promised to city workers.

Pensions are now one of the city’s fastest-growing expenses. In recent years the city’s required contributions to its pension funds have more than quadrupled, to $4.7 billion this year from $1.1 billion in 2001.

Two years from now, the city expects to spend one out of ten dollars in its budget on pension contributions

In New York, public workers’ pensions are guaranteed by the State Constitution, so once they are granted, they cannot be reduced, even if they cost more than expected.

more–>

City Foots Bill as State Upgrades Pensions

ALBANY — It began with a simple plea for equity, for the same deal that other unions had. It ended with thousands more former New York City employees getting expensive Christmas presents: bonus checks in each year of retirement that would eventually reach $12,000, all paid for by taxpayers.

The road to a new pension benefit that will eventually cost New York City an estimated $100 million a year began in 1995, when the city’s correction officers decided that on top of their regular pensions, they deserved the “Christmas bonuses.” Retired police officers and firefighters already received such checks, and the correction officers reasoned that they should, too.

When the union asked for the money during contract negotiations, the city said no, saying it could not afford such largess. But the matter did not end there.

The union turned to Albany. It endorsed Gov. George E. Pataki’s 1998 re-election bid and gave state lawmakers and political parties $79,000 in campaign donations in 1999. Then, after more lobbying and contributions, it persuaded the City Council to ask the state to pass the bill.

That year a bill establishing the annual bonuses sailed through the Legislature. The Giuliani administration, disturbed about the city’s being stuck with the cost, howled in protest, and both the city and state comptrollers and the governor’s own budget division recommended a veto. But the governor signed the bill.
more–>