Recap of the NYCERS Administrative Budget for FY-2026

By the Numbers

On June 12, 2025, the NYCERS trustess adopted the FY-2026 admin budget.

• The budget dropped from $166.0M to $165.8M.
  • Salaries increased from $53.7M to $55.9M.
  • Friinge increased from $16.5M to $17.7M.
  • OTPS decreased from $95.96M to $92.3M

NYCERS has officially stated that the Legacy Replacement Project (LRP) is "anticpated" to be completed by December 2030. That is a four and half year delay on a project that started in 2015. In addition there is yet no detail plan how this project will be completed by this date.

Highlights of the Other Than Personnel Services (OTPS) Expenses

****

Category	FY-2025	FY-2026
General expense	$15.64M	$18.15M
Security	$915K	$915K
Busines Recovery	$3.10M	$3.65M
Mainframe	$1.51M	$1.76M
Non-Maineframe	$19.91M	$24.71M
LRP and Upgrades	$54.82M	$43.12M

Highlights of the OTPS Budget

In light of the fiasco with LRP project I want to point that the Accenture line item was reduced this year from $18.7M (2025) to $10.8M (2026). As background for this contract which began in FY-2021, the following amounts have been budgeted to Accenture for the LRP contract:

• FY-2021: $826K
• FY-2022: $19.32 million
• FY-2023: $23.06 million
• FY-2024: $23.19 million
• FY-2025: $18.7 million
• FY-2026: $10.8 million

In addition to the amounts paid to Accenture, NYCERS (in conjunction with the Accenture's work) contracted with Penfax for an off the shelf piece of software that Accenture is customizinge for NYCERS. The amounts budgeted for Penfax are:

• FY-2021: $3.06 million
• FY-2022: $3.18 million
• FY-2023: $3.59 million
• FY-2024: $3.99 million
• FY-2025: $4.19 million + $200,000 dev. licenses
• FY-2026: $3.99 million + $200,000 dev. licenses

Just for laughs NYCERS increased its budget for

• contract COBOL programmers from $2.0 million to $3.26 million.
• the Garnter contract from $1.76 million to $2.64 million

NYCERS has maintained or decreased its budget for the following major LRP items:

• QA Vendor from $1.37 million to $1.37 million
• QA Testers from $2.90 million to $2.90 million
• Data Analysts from $2.09 million to $2.09 million
• Project Managers from $3.26 million to $2.44 million
• Business Analysts from $2.76 million to $1.74 million
• Risk Consultant from $700,000 to $700,000

There was also a significant reduction in the contingency item in the LRP project:

• from $9.14 million to $5.50 million

This is a strange item to have in the budget since the Board has the authority to modify the budget during the year if needed. Because of this item, the OTPS did not really decrease by $3.6B in 2026 but is almost the same as in 2025.

The Salesforce/Accenture Application

Prior to the LRP contract Accenture installed a customized Salesforce CRM application at NYCERS.
The current budgeted cost for that application was $5.78 million in FY-2025 and is $7.38 million in FY-2026.

I can not get my mind around this total insanity. Just paying the bills for all this garbage would kill you.

History from FY-1996 to FY-2026

History of NYCERS Admin Budget 1996-2026

Fiscal Year	F/T Count	P/T Count	College Aides / Hourly	PS Budget	OTPS Budget	Fringe	Total	% Increase
2026	501	30	16	$55,860520	$92,309,697	$17,663,655	$165,833,872	-00.0013%
2025	501	30	16	$53,679,194	$95,900,865	$16,461,953	$166,042,012	00.05%
2024	501	30	16	$54,290,508	$98,040,138	$13,633,903	$165,964,549	13.37%
2023	485	30	16	$43,016,089	$90,436,500	$12,942,144	$146,394,733	7.92%
2022	483	30	16	$38,397,943	$85,531,063	$11,719,465	$135,648,471	37.94%
2021	474	27	16	$36,842,549	$50,210,145	$11,283,945	$98,336,639	7.10%
2020	438	27	16	$35,262,139	$45,862,557	$10,689,350	$91,814,046	4.97%
2019	428	5	30	$33,592,612	$43,532,302	$10,344,565	$87,469,479	39.44%
2018	415	5	30	$31,704,410	$21,832,718	$9,194,015	$62,731,143	3.55%
2017	401	5	30	$31,056,080	$20,916,796	$8,605,288	$60,578,164	4.81%
2016	392	5	30	$30,233,989	$19,407,619	$8,155,517	$57,797,125	4.70%
2015	392	5	30	$29,131,972	$18,154,572	$7,915,476	$55,202,020	3.68%
2014	383	5	30	$26,813,635	$18,761,240	$7,669,819	$53,244,694	2.18%
2013	380	5	20	$26,623,635	$17,951,822	$7,532,499	$52,107,956	1.93%
2012	372	12	0	$25,756,827	$18,781,428	$6,603,649	$51,122,139	1.14%
2011	372	12	0	$26,046,827	$18,492,228	$6,006,573	$50,545,628	2.76%
2010	372	12	0	$26,046,827	$17,777,228	$5,362,640	$49,186,695	1.88%
2009	371	13	0	$25,189,842	$18,208,861	$4,879,903	$48,278,606	6.22%
2008	371	13	0	$23,597,857	$17,259,313	$4,799,066	$45,656,236	10.80%
2007	364	13	0	$22,616,783	$14,258,471	$4,375,788	$41,251,042	5.73%
2006	342	13	0	$20,255,911	$14,683,855	$4,076,823	$39,016,589	1.01%
2005	342	13	0	$19,737,687	$14,851,355	$3,887,624	$38,476,666	***
2004	334	13	0					***
***								***
1996	154	0	30	$6,199,709	$2,573,715	na	$8,773,424	***

NYC - Exploding Costs for Employees Health Insurance

In the June 6th, 2025 issue of the Chief, the New York City announced the start of negotiations with EmblemHealth/UnitedHealthcare for a new health insurance plan for employees and non-Medicare retirees.

Warning: United Healthcare is being investigated by the federal government for Medicare/Medicaid fraud ae per a WSJ article May 15, 2025.

The City's current carrier is EmblemHealth/Anthem-Empire Blue Cross. The City will still be using EmblemHealth but has changed from Anthem to UnitedHealthcare for hospital coverage.

Current Cost Problems

It is clear from the chart below (based on NYC-OLR data) that the City has a serious cost inflation problem with the current EmblemHealth insurance coverage. It is, however, not clear whether this is an industry problem or is it a problem made worse by EmblemHealth's operations. In either case the City has an exploding cost problem.

Another scary piece of data is that it appears that Emblemhealth is almost totally dependent on the City for revenues.

EmblemHealth had reported premium revnue of:

• $8.33B in 2022 and
• $7.726B in 2023.

See report on page 6.

The City (plus HHC and Housing) paid EmblemHealth (GHI and HIP) $9,678M in FY-2024 as per OLR's reporting.

The primary problem with the NYC GHI-CBP health insurance plan for employees and non-Medicare retirees is increasing costs.

• In 2014 the City paid $3.416 billion in premiums for GHI-CBP and
  
• in 2024 that amount had increased to $7.927 billion.

That is an 113% increase over 11 years with a 13,000 decrease in employees and an increase of 5,000 in non-Medicare retirees.

Medicare vs EmblemHeath

In contrast to EmblemHealth, in 2015 Medicare spent $10,581 for both Part A plus Part B benefits per beneficiary and in 2023 Medicare spent $14,253 per beneficiary.

That is a 34.7% increase. (2024 Medicare Trustees Report – page 195).

As of the 2015 - 2023 period, the City’s total cost for GHI-CBP was $3.772 billion in 2015 and $6.861 billion in 2023.

That is an 81.9% increase.

In addition to lower cost increases, Medicare is a more effective plan than GHI-CBP and covers a higher risk population.

It would be very interesting if Medicare were able to administer the health claims for the City's employees and non-Medicare retirees and the City reimbursed Medicare.

The Participation Problem

There is also a secondary problem of a shrinking group of participating doctors and hospitals:

• In the NYC metro area
• In the rest of the USA.

I assume these issues are tied into the reimbursement schedules and operating problems between providers and Emblemhealth.

Over the last 11 years the City has obviously not been able to resolve this cost issue between the City and Emblemhealth and it is not clear how the City can resolve it now.

$5 Billion Fire Sale for the New York City Pension Funds

On Tuesday, May 27, the Comptroller issued the followowing release:

New York, NY — New York City Comptroller Brad Lander and trustees of the five public pension systems announced the successful completion of a landmark $5 billion private equity secondary sale across the City’s systems today. This transaction, initiated in December 2024 and finalized this month, represents one of the nation’s largest ever pension-led secondary sales.

The following news clip provides a little more detail:

Blackstone’s Strategic Partners has acquired a $5bn private equity portfolio from the New York City Retirement Systems, marking one of the largest secondary transactions ever completed by a US public pension, according to Bloomberg. The transaction includes approximately 450 limited partnership interests across 125 funds managed by 75 general partners. According to a statement from the NYC Comptroller’s Office, the sale forms part of a strategic portfolio realignment rather than a liquidity-driven divestment.

The formal auction, which launched in December 2024, attracted over 80 secondary market participants. Evercore acted as financial advisor, with Morgan Lewis providing legal counsel. While financial terms were not disclosed, secondary transactions of this scale are typically completed at a discount to NAV, reflecting the complexity and illiquidity of mature fund stakes.

The deal comes amid a surge in secondary market activity as institutional investors seek to rebalance private equity allocations amid slower M&A and IPO exits, higher interest rates, and limited distributions. The NYC Retirement Systems’ private equity returns have underperformed national peers, with fiscal year 2024 gains of 4–5%, compared to 10.9% at CalPERS and 8.6% at CalSTRS.

With over $270bn in AUM across five pension funds serving teachers, civil employees, firefighters, police, and education workers, the NYC Retirement Systems’ sale signals a potential re-evaluation of long-term private market exposure.

Blackstone’s Strategic Partners, which has raised over $67bn across asset classes, continues to cement its position as one of the largest players in the secondaries market.

According to the June 30, 2024 NYC annual financial statement, the five city pension funds allegedly had $67.2 billion in alternative investments.

The big question is how much of loss did the pension funds absorb because of the sale. The Comptroller has not given any accounting details.

Tax Reform for the 99% and Fixing the Federal Deficit

Towards th end of this post is a chart of the current Trump marginal tax rates for 2025 along with more fair and progressive marginal rates. Below that chart is an other chart with details of the federal income tax collected for 2022. The current Trump rates were put in place in 2018 and scheduled to stop in 2025. Trump is pushing to make them permanent.

If you compare the two sets of marginal rates, you can see that the Trump rates are very regressive favoring the rich (the 1%) and the fair rates are very progressive favoring the less well off.

If you look at the range starting at $626,350, you will see the first occurrence of the top marginal rate, 37%. The the current range stays flat from that dollar amount on up without any limit.

This is the key feature of the Trump tax cuts along with the destruction of the alternative minimum tax. In fact in 2022, the average total tax rate was 27% for anyone filing taxes with income covered by the 37% marginal tax rate.

Federal Deficit for 2022

Since 2022 is the most recent year that the IRS has published data tables, I am focusing on the federal budget deficit for 2022. The deficit is very straight forward. The government spent $6.3 trillion and took in only $4.9 trillion, a $1.4 trillion short fall. See the image below.

Unfortunately, the FY-2024 deficit was worse, $6.8 trillion vs. $4.9 trillion, a $1.9 trillion shortfall.

The "not serious" peolple call for cutting spending to close the deficit. However, you can only trim a spending budget so much. "Serious" people go out and get a second job to cover their basic expenses. For the federal government a second job comes down to raising taxes and not on poor people but on very rich people. With simple arithmetic, this means the federal government needs to raise an extra $2.0 trillion every year.

Note:
The corporate income tax rate is currently 21% and it needs to be raised back to at least 30%.
I don't think taxing corporate profits is a good way to raise revenue
but until we get a wealth tax, we don't have an alternative to the corporate tax system.
Note:
The income limit on FICA taxes also has to be eliminated.

The "1%" War on Taxes

Since 1960, the "1%" has waged an intense and successful war on the fairness of the federal tax code.

• The top marginal rate was 91% in 1960.
• The top marginal rate was 70% in 1980.
• The top marginal rate was 39.6% in 2000
• The top marginal rate is now 37%.

Under Trump, people with taxable incomes below $10,000 pay a 10% marginal tax rate. While people with taxable income over $500,000 pay only a 37% marginal tax rate. You can see why rich people love Trump.

Why any poor person voted for Trump is insane.

In 2022,

• a person earning $40,000 paid 10.2% in federal income tax.
• a person earning $75,000,000 paid 11.95% in fedral income tax.
• a person earning $150,000 paid 13.92% in federal income tax.
• a person earning $20,000,000 paid only 26.79% in fedral income tax.

The federal income tax, obviously, is based on income earned during the year. It is not a tax on net worth.
As of 2024 the top 1% in the US had a net worth of $49.2 trillion, while the bottom 50% had a net worth of $4.0 trillion.
This wealth disparaty does not enter into the income tax calculation.

The 1% do not want a progressive income tax system but the 99% needs to demand that the major part of the burden of financing the government be born by the citizens who most benefit from the success of the country.

The objective of the progressive marginal tax rates is to shift the 55%/45% distribution of the tax burden to a 33%/67% distribution with the 1% carrying the 75% share.

Why should the 1% pay the 67%? Because they are insanely wealthy and without the protection of the 99%, their wealth would be at risk.

Taxes in 2022

In 2022, the IRS collected $2.1 trillion dollars in personal income tax.

Of that amount the bottom 98.59% paid $1.155 trillion and the top 1.5% paid $0.945 trillion.
The progressive tax rates would have raised about $4.0 trillion and given the 91% a lower tax bill

In order to close the federal budget deficit, the federal government needs to collect at least $4 trillion in personal income tax as well as a siginificant increase in corporate income tax and lifting the income cutoff of Social Security taxes.

A proposed progressive marginal tax rates will, if applied to all taxable income ($11.404 trillion), generate approxmately $3.0 trillon return with close to $2.0trillon coming from the wealthest 1.5% of the filers and $1.0 trillion from the rest.

Marginal Tax Rates for 2025

Start	End	Current Marginal Rate	Proposed Marginal Rate	% of Total AGI(2022)	Taxes Paid in 2022 with Trump Rates (biilions)	Estmated Taxes Paid in 2022 with Altenative Rates (billions)	Avg. % of Taxable Income Paid with Proposed Marginal Rates
$0	$11,925	10%	3%	.5%	$0.2	$.02	2%
$11,925	$48,475	12%	8%	12.4%	$63.7	$32.0	5%
$48,475	$103,350	22%	14%	18.8%	$213.2	$135.7	7.2%
$103,350	$197,300	24%	20%	24.0%	$397.7	$331.4	11.6%
$197,300	$250,525	32%	32%	19.5%	$143.1	$143.4	19%
Break Point
$250,525	$626,350	35%	48%	(part of 19.5%)	$334.7	$382.4	22%
$626,350	$1M	37%	50%	7.6%	$254.3	$343.2	34%
$1M	$1.5M	37%	69%	2.9%	$110.8	$206.7	51%
$1.5M	$2M	37%	80%	1.7%	$67.3	$145.5	62%
$2M	$5M	37%	85%	4.2%	$166.0	$381.4	68%
$5M	$10M	37%	87%	2.4%	$96.5	$226.9	69%
$10M	and up	37%	96%	7.1%	$289.1	$658.9	70%
Total					$2,098.9	$2,998.5

Federal Income Taxes for 2022

AGI Range	Number of tax returns for range	% of total range	Total AGI for the range	% of total AGI	Taxes Paid	% of taxes to AGI
All	161M	100.0%	$14.834T	100%	$2.099T	14.15%
Under $50K	87M	52.0%	$1.909T	12.9%	$63.795B	3.34%
$50k to $100K	39M	24.2%	$2.782T	18.8%	$213.183B	7.66%
$100K to $200K	26M	16.0%	$3.567T	24.0%	$397.758B	11.15%
$200k to $500k	10M	6.2%	$2.891T	19.5%	$478.105B	16.54%
$500k to $1M	1.7M	1.0%	$1.124T	7.6%	$254.285B	22.62%
$1M to $1.5M	0.4M	0.2%	$0.435T	2.9%	$110.820B	25.47%
$1.5M to $2M	0.2M	0.1%	$0.255T	1.7%	$67.287B	26.44%
$2M to $5M	0.2M	0.1%	$0.621T	4.2%	$166.027B	26.73%
$5M to $10M	0.1M	0.033%	$0.363T	2.4%	$96.476B	26.59%
$10M and up	0.03M	0.021%	$1.052T	7.1%	$281.097B	23.88%

Social Security - Medicare - Fair Income Tax - Federal Debt

The Federal Deficit

• 1996 - $5.225 trillion
• 2016 - $19.573 trillion
• 2020 - $26.945 trillion
• 2024 - $35.464 trillion

As of January 2025, the US federal debt is $36.218 trillion. The debt is created by the US government spending more than its revenues and having to borrow to cover the short fall. This can be remedy by spending less, collecting more revenues or a combination of both.

This debt is not caused by Social Security or Medicare benefits but actually is caused by an unfair tax system. The Trump tax cuts started in 2018.

Social Security is a pension/annuity system funded by US workers.

The figures below are from the Social Security Trustees Report for 2023.

In 2023 workers paid $1.112 trillion dollars via payroll deductions into the system.

This is 12.4% of the wages up to $160,200 of every worker in the country in 2023. This does not include Medicare taxes that American workers pay and this is also separate from the federal income taxes that workers paid in 2023.

During 2023, Social Security paid out $1,232 trillion in benefits to retirees and disabled Americans and paid $7 billion for its own admin expenses.

The Social Security Trust Fund started 2023 at $2.830 trillion and ended the year at $2.788 trillion. That is a loss of $41 billion.

The system earned $67 billion in interest (2.3%, $67/$2,829) from the US treasury bonds that it is forced to buy with any surplus assets.

This requirement is counter to any prudent investment strategy for a pension fund. A diversified strategy could easily create a $75 billion return on interest and dividends, and $140 billion in increased asset value ($2.852 trillion times 5%). That is $215 billion each year rather than $67 billion. Just think of all the wasted years in the past. Of course, the federal government would be paying higher a interest rate on its debt.

The Social Security system would be greatly strengthened by applying the 12.4% tax to incomes above $500,000 and raising the federal minimum wage for all workers.

In plain English, the Social Security system has been subsidizing the expenses of the federal government. If the Social Security Trust Fund had been allowed to follow a diversified stock/bond policy, the system would self-sustaining into the foreseeable future.

In addition, the Social Security system is not part of the current federal debt. In fact, it owns $2.8 trillion of the $36 trillion federal debt.

Social Security Trust Fund Recap for 2023

• $2.830 trillion Open Bal - 2023
• $1.233 trillion Wage Taxes
• $0.067 trillion Interest Earned
• -$1.379 trillion Benefits Paid
• -$0.007 trillion Admin Expenses
• $2.788 trillion Close Bal - 2023

Medicare Benefits for Retirees and Disabled Americans

The figures below are from the 2023 annual report from the trustees of the Medicare Trust Fund.

In 2023, American workers paid $367.2 billion in Medicare taxes (2.9%) on all wages. This is separate from federal income taxes and Social Security taxes.

The Medicare Part A trust fund increased in value during 2023. Benefits paid out, however, were $37.4 billion more than payroll taxes collected. Miscellaneous revenue items created the $12.2 billion increase in the fund.

In the future, Medicare Part A may become a major cost item in the federal budget but as of now it is not a cost item.

Medicare Part B and Part D do require federal contributions which are components of the federal budget:

• Part B - $342.1 billion in 2023
• Part D - $$93.7 billion in 2023

If the economy is growing, it helps with Medicare costs and if the economy is not doing well, it is negative for Medicare costs.

Part A Benefits

Medicare Trust Fund Recap for 2023

Part A Benefits

• $196.6 billion Open Bal 2023
• $367.2 billion Medicare Wage Taxes
• $35.0 billion Income Taxes on OASDI benefits
• $5.7 bllion Interest Earned
• -$397.5 billion Benefits Paid
• -$5.6 billion Admin Expenses
• $208.8 billion Close Bal - 2023

Part B Benefits

• $194.2 billion Open Bal 2023
• $131.2 billion Part B Premiums (25%)
• $342.1 billion Federal Treasury (75%)
• $4.1 bllion Interest Earned
• -$497.4 billion Benefits Paid
• -$5.4 billion Admin Expenses
• $172.2 billion Close Bal - 2023

Part D Benefits

• $18.3 billion Open Bal 2023
• $18.6 billion Part D Premiums
• $93.7 billion Federal Treasury
• $15.8 billion Payments from States
• $0.2 bllion Interest Earned
• -$130.5 billion Benefits Paid
• -$0.5 billion Admin Expenses
• $15.7 billion Close Bal - 2023

Federal Income Taxes for 2022

The figures shown below come from the tax tables on the IRS web site. Calendar year 2022 is the most recent year reported by the IRS and 1996 is the oldest year.

You will see from the first table below that in 2022 the total US national Adjusted Gross Income (AGI) was $14.834 trillion. In 1996, the figure was $4.536 trillion. The 2022 amount is over triple the amount from 1996.

1. In 1996,
   • tax filers with AGI under $25,000
     • represent 53% of all filers but
     • their total AGI was 16% of the total AGI of all filers.
     • their total AGI was $671 billion
     • their average tax rate was 7.0%
     • paid $34.414 billion in income taxes
   • tax filers with AGI over $200,000
     • represent 1.3% of all filers but
     • their total AGI was only 17.8% of the total AGI of all filers
     • their total AGI was $807 billion
     • their average tax rate was 28.1%
     • paid $226.112 billion in income taxes
2. In 2022,
   • tax filers with AGI under $50,000
     • represent 52% of all filers but
     • their total AGI dropped to only 12.9% of the total AGI for all filers.
     • their total AGI was $1.744 trillion.
     • their average tax rate was 5.4%
     • paid $63.924 billion in income taxes
   • tax filers with AGI over $500,000
     • represent 1.5% of all filers but
     • their total AGI significantly increased to 25.9% of the total AGI of all filers
     • their total AGI was $3.849 trillion (450% over 1996)
     • their average tax rate was 24.6%
     • paid $945.991 billion in income taxes

If the average tax rate for the top 1.5% was 50%, the total US income tax would have increased by $976 billion in 2022. The total national income tax for 2022 would have jumped from $2.099 trillion to $3.075 trillion.

Federal Income Taxes for 2022

AGI Range	Number of tax returns for range	% of total range	Total AGI for the range	% of total AGI	Taxes Paid	% of taxes to AGI
All	161M	(100.0%)	$14.834T	100%	$2.099T	15.27%
Under $50K	84M	(52.0%)	$1.744T	12.9%	$63.924B	5.39%
$50k to $100K	39M	(24.2%)	$2.782T	18.8%	$213.183B	8.25%
$100K to $200K	26M	(16.0%)	$3.567T	24.0%	$397.758B	11.28%
$200k to $500k	10M	(6.2%)	$2.891T	19.5%	$478.105B	16.58%
$500k and up	2.5M	(1.5%)	$3.849T	25.9%	$945.991B	24.60%

Details of the Top 1.5%

AGI Range	Number of tax returns for range	% of total range	Total AGI for the range	% of total AGI	Taxes Paid	% of taxes to AGI	Fairer Tax Rate	Fairer Tax Amount
$500 to $1M	1.7M	(1.0%)	$1.124T	7.4%	$254.285B	22.65%	25%	$257.206B
$1M to $1.5M	360K	(0.2%)	$0.435T	2.9%	$110.820B	25.50%	35%	$139.477B
$1.5M to $2M	148K	(0.1%)	$0.254T	1.7%	$67.287B	26.47%	45%	$104.551B
$2M to $5M	208K	(0.1%)	$0.621T	4.2%	$166.027B	26.76%	61%	$345.158B
$5M to $10M	52K	(0.003%)	$0.362T	2.4%	$96.476B	26.62%	75%	$250.306B
$10M and up	35K	(0.002%)	$1.052T	7.1%	$251.097B	23.90%	86%	$806.157B
"1%" Total					$945.991B	24.80%	49.49%	$1,902.866B

Update - Junk in NYCERS Portfolio - 2024

Runaway Investments fees

In FY-2000 NYCERS paid $37.4 million in investment fees for an asset base of $42.8 billion.

In FY-2023 NYCERS paid $489.9 million in investment fees for an asset base of $82.4 billion.

In FY-2024 NYCERS paid $572.0 million in investment fees for an asset base of $87.9 billion.

The numbers speak for themselves. There is no benefit to these radically increased fees. But the trustees have no idea what is going on.

This is a big part of the income inequality in America. This story is not just about NYCERS but every public pension plan in America.

Increasing Investment Risk

In a prior post from January 2020, I outlined a new accounting reporting requirement for government pension plans (GASB 72) mandating that plans report a breakdown of the reliability of the reported value of the plan's investments. The assets are broken down into 3 levels as listed below:

• Level-1 assets - open market - very liquid
• Level-2 assets - open market - not as liquid
• Level- 3 and NAV assets - no open market - not liquid

In addition to these crazy fees noted above, the risky Level-3 assets at NYCERS have grown steadily since 2015. On top of this growth in risky assets, in 2023 there was a law passed in Albany to raise the limit (from 25% to 35%) on the amount of Level 3 and NAV assets in a NYS public pension plan.

In the table below you will see the growth for Level-3 and NAV class assets at NYCERS.

Note: As of FY-2023 NYCERS is relabeling alternative investments as net asset value items rather than Level 3 as a "practical expedient". This is a PR sleight of hand. Nobody wants to be called Level-3. "NAV" is a lot more vague. $19.8 billion (25% of the portfolio) for Level-3 and NAV assets is an obvious red flag for the risk level of the portfolio. You can be sure that $19.8B is the upper bound for this class and that a 50% reduction is a real possibility.

Ranking of NYCERS Assets via GASB 72

Fiscal Year	Level-1 Assets (in thousands)	Level-2 Assets	Level-3 Assets	Assets at Net Asset Value	Total
FY-2014	$27,028,432	$17,437,139	$10,642,729	$0	$55,108,300
FY-2015	$27,707,076	$17,175,757	$10,796,968	$0	$55,679,801
FY-2016	$27,330,534	$15,924,399	$10,377,791	$1,123,861	$54,756,585
FY-2017	$32,312,375	$17,461,428	$10,914,801	$95,987	$60,784,591
FY-2018	$31,219,885	$23,282,843	$10,880,803	$66,675	$65,450,206
FY-2019	$34,128,310	$22,782,825	$11,534,369	$6,979	$68,452,483
FY-2020	$33,647,567	$24,941,479	$11,856,921	$3,735	$70,449,703
FY-2021	$42,162,979	$30,981,818	$14,845,548	$1,240	$88,091,585
FY-2022	$32,892,068	$26,386,373	$18,726,172	$1,129	$78,005,742
FY-2023	$35,986,966	$25,235,457	$461,156	$19,845,541	$81,529.120
FY-2024	$35,349,996	$30,145,235	$476,857	$21,630,394	$87,602,482

Investment Expenses for the Assets by Quality for FY-2024

In FY-2024 NYCERS paid the following investment management fees for the different levels:

1. $62.2M for Level 1 assets (FY-2019 fees = $39.7M).
2. $26.4M for Level 2 assets (FY-2019 fees = $18.4M)
3. $433.0M for Level 3 and NAV assets (FY-2019 fees = $140.5M)

Again, the numbers speak for themselves. The trustees are being rolled big time - everywhere.

A Four Year Delay in the NYCERS LRP Project - Time for DOI to Investigate

In its FY-2024 financial report (released in December 2024), NYCERS stated that there was a serious delay in completing its Legacy Replacement Project with only a vague reference to changes in the legacy systems. NYCERS promised a report with a new schedule at its February 2025 Board meeting. See the text below:

LRP began in June 2021, with a plan to complete the transformation over five years/five phases, with a target completion of September 2026.

Phase 1 was launched in January 2023, introducing foundational functionality that future phases will build upon.

In the midst of Phase 2 delivery, a range of legacy system changes surfaced that impacted the overall timeline. The Systems Integrator proposed to deliver a subset of Phase 2, called Phase 2.0, as this functionality did not rely on those legacy system changes, and we are currently on track for a January 2025 launch.

In parallel to a Phase 2.0 delivery, the Systems Integrator and NYCERS are working on a re-baseline plan for the remaining phases, which will be discussed during the February 2025 Board of Trustees Meeting.

February 2025 Board of Trustee Meeting

Last week at that meeting, the staff reported to the trustees that the new tentative completion date for the LRP project would be at the end of 2030 rather than the original September 2026 date. That is over four years behind schedule for a five-year contract.

Since December, Accenture (the "systems integrator"), the firm developing the project, delivered a revised high-level plan for the completion of the remaining scope of the project with a target date as of the end of 2030. The NYCERS staff stated that it had reviewed this plan.

Going forward, Accenture will provide a detailed resource plan supporting the 2030 completion target date. This detailed plan is needed for NYCERS to be able to give final approval for the new plan. The NYCERS approval of this new plan is targeted for the spring of 2025.

After a two-minute presentation there were no questions from the trustees concerning this four-year delay. This is obscene.

Background

NYCERS started the LRP project in July 2015. It was the brain child of Liz Reyes, the IT director at the time. She now is the deputy executive director and is hoping to become the executive director in May when the incumbent retires.

NYCERS signed the LRP implementation contract with Accenture in April 2021. It had an approximate term of five years with a total cost of $85.1M.

Three years later in 2024, Accenture notified NYCERS that the September 2026 completion date was not achievable.

When does gross incompetence become criminal?

I am not aware of any evidence of corruption involving the LRP project.

However, NYCERS’s glaring incompetence and obvious inattention to the project’s risks raises red flags that should be investigated.

NYCERS has never produced a cost/benefit analysis for this project.

Gartner has been under contract to NYCERS since 2015 providing advice on the LRP project. What was that advice?

During 2019 and 2020, NYCERS paid Accenture approximately $12M to install a Salesforce application. This means that Accenture has had extensive experience with NYCERS’s operations. Why did it take Accenture three years to come up with a new completion date four years out from September 2026?