On Monday the Board of Trustees appointed a permanent executive director. Her name is Melanie Whinnery. She will start on September 5th. She currently works at NYSLERS
I am so very glad that the Trustees chose to give the NYCERS staff a break from the mayhem of the last 12 years. Lets hope this was a good decision.
In September, 2015 I wrote a posting about the new NYCERS actuay, Sherry Chan, who was appointed in May, 2015. She is currently being paid an annual salary of $279,000.
Specifically I wrote:
The assumed interest rate is the key component of the annual pension costs that the city and the other participating employers must pay to the pension funds each year. It will be interesting to see where Ms. Chan stands on the 7% net of fees rate. She will be required to make a recommendation this winter for a new five year rate effective July, 1, 2016 and Albany will have to enact enabling legislation by June 30, 2016.I suspect she will punt and ask for a one year extension of the old rate. North did this all the time. It is a bad fiscal policy and contributes to the under-funding of the pension funds.
Sure enough on June 30, 2016, the governor signed Chapter 61 of the Laws of 2016 which was a one year extension of the 7% (net of fees) interest rate. Ms. Chan stated that she was to busy during her first year to recommend a new five year rate.
This year, on June 29, 2017, the governor signed Chapter 71 of the Laws of 2017 which was again a one year extension of the 7% (net of fees) interest rate. This time Ms Chan stated that she chose not to recommend a five year interest rate because she was waiting for the completion of the two year actuarial audit.
As a point of reference the previous two year actuarial audit was completed in 2016.
I could yell and scream but, what the hell, nothing is going to change.
It is June 26, 2017, a sunny June day. It is also two years ago that the NYS Department of Financial Services announced a major audit of the seven major NYS retirement systems.
There are still no audits reports from DFS.
For the record, DFS is scared to death to publish any reports on the seven retirement systems. DFS knows how bad the situation is. They can either report the facts and create sheer terror, or they can fake it and be on record for hiding the facts.
Just stop billing the retirement systems for your bullshit audits and save the taxpayers some money.
On April 23, 2017 the NYCERS Trustees adopted the FY-2018 Administrative Budget for the agency. It increased the payroll by $645,000 from $31.06M to $31.70 and the OTPS budget by $900,000 from $20.92m to $21.83M. The F/T head count was increased from 401 to 411. The P/T head count stayed at 35.
Interestingly, the Chair, John Adler, voted against the budget primarily because of the increase in the F/T head count. With the Comptroller's vote the increased head count was adopted. It is a hard budget rule that head count drives costs.
The table below charts out the history of the NYCERS admin budget back to 1986. That was before the 1996 passage of the “corpus funded” budget law.
The 1989 NYCERS budget was the high mark for the NYCERS budget while it was still part of the total city budget. As of July 1, 1996 NYCERS’s budget began to be funded through the assets of the system under the control of the trustees and it was no longer an item in the city's budget. The mayor and the comptroller each have a super vote on the budget resolution in so far as at least one of them needs to vote for the budget for it to be adopted.
In 1996, the non-loan agency head count was 154 F/T employees and 30 college aides. The total budget, both PS and OTPS, was $8.77M. The agency was on life support and the Mayor's Executive Budget had set the NYCERS head count at 146 for 1997.
From 1997 to 2005 with the help of "corpus funding" the agency's F/T staff increased from 154 to 342 along with the original 30 college aide positions. That was a radical increase of 186 positions. In addition in 2000, NYCERS moved into modern office space (133,000 sq. ft.) in downtown Brooklyn.
The NYCERS budget in 2006 had a F/T head count of 342 and a total budget of $34.94M, not including fringe benefit costs. FY-2006 was the last budget I prepared. At that point NYCERS was the best staffed agency in the city and the best funded. If necessary, NYCERS could have performed at a top level indefinitely without any increase in head count.
As of July 1, 2017 NYCERS will have a head count of 411. That is an increase of 69 people over the last 11 years. You would think NYCERS must be functioning flawlessly. It is not.
In 2015, I wrote a critical review of a IT upgrade that NYCERS was planning for the five year 2016-2020 budget cycle. The project is two years through the five year cycle with nothing much done. The only good thing is that the trustees have not let NYCERS spend the full $132M that the staff had requested.
Last year the previous executive director resigned. Adler and the trustees are now in the process of appointing/hiring a new executive director. Let us hope that they find an honest competent person for the position.
| Fiscal Year | F/T Count | P/T Count | College Aides / Hourly | PS Budget | OTPS Budget | Total | % Increase |
|---|---|---|---|---|---|---|---|
| 1986 | 205 | 0 | 30 | $5,916,793 | $1,423,743 | $7,340,536 | |
| 1987 | 203 | 0 | 30 | $6,621,803 | $1,881,300 | $8,167,220 | 11.2% |
| 1988 | 223 | 0 | 30 | $6,621,803 | $1,881,300 | $8,503,103 | 4.11% |
| 1989 | 243 | 0 | 30 | $7,849,731 | $1,932,351 | $9,782,082 | 15.4% |
| 1990 | 238 | 0 | 30 | $8,284,883 | $2,578,693 | $10,863,576 | 11.06% |
| 1991 | 229 | 0 | 30 | $6,826,473 | $2,475,205 | $9,301,678 | -14.38% |
| 1992 | 225 | 0 | 30 | $6,646,549 | $2,216,262 | $8,862,811 | -4.72 |
| 1993 | 223 | 0 | 30 | $6,858,991 | $2,198,882 | $9,057,873 | 2.20% |
| 1994 | 194 | 0 | 30 | $6,778,541 | $2,183,101 | $8,961,642 | -1.06% |
| 1995 | 167 | 0 | 30 | $6,202,062 | $2,080,504 | $8,282,566 | -7.58% |
| 1996 | 154 | 0 | 30 | $6,199,709 | $2,573,715 | $8,773,424 | 5.93% |
| 1997 | 200 | 0 | 30 | ||||
| 1998 | 230 | 0 | 30 | ||||
| 1999 | 270 | 0 | 30 | ||||
| 2000 | 290 | 0 | 30 | ||||
| 2001 | 320 | 13 | 30 | ||||
| 2002 | 320 | 13 | 30 | ||||
| 2003 | 334 | 13 | 30 | ||||
| 2004 | 334 | 13 | 30 | ||||
| 2005 | 342 | 13 | 30 | $19,737,687 | $14851355 | $34,589,042 | 288.6% |
| 2006 | 342 | 13 | 30 | $20,255,911 | $14,683,855 | $34,939,766 | 1.01% |
| 2007 | 364 | 13 | 0 | $22,616,783 | $14,258,471 | $36,875,254 | 5.54% |
| 2008 | 371 | 13 | 0 | $23,597,857 | $17,259,313 | $40,857,170 | 10.80% |
| 2009 | 371 | 13 | 0 | $25,189,842 | 18,208,861 | $43,398,703 | 6.22% |
| 2010 | 372 | 12 | 0 | $26,046,827 | $17,777,228 | $43,824,055 | 0.98% |
| 2011 | 372 | 12 | 0 | $26,046,827 | $18,492,228 | $44,539,055 | 1.63% |
| 2012 | 372 | 12 | 20 | $25,756,827 | $18,781,428 | $44,538,255 | 0.00% |
| 2013 | 380 | 5 | 30 | $26,623,635 | $17,951,822 | $44,575,457 | 0.08% |
| 2014 | 383 | 5 | 30 | $26,813,635 | $18,761,240 | $45,574,875 | 2.24% |
| 2015 | 342 | 5 | 30 | $29,131,972 | $18,154,572 | $47,286,544 | 3.76% |
| 2016 | 342 | 5 | 30 | $30,233,989 | $19,407,619 | $49,641,608 | 4.98% |
| 2017 | 401 | 5 | 30 | $31,056,080 | $20,916,796 | $51,972,876 | 4.70% |
| 2018 | 411 | 5 | 30 | $31,701,410 | $21,832,718 | $53,534,128 | 3.00% |
The total costs for the five actuarial pension funds for the NYC FY-2018 Budget is $10.009B up from $9.663B in FY-2017.
| Teachers Retirement System | $3.744B | 110,000 working teachers | $34,000 per teacher. |
| Board of Education Retirement System | $.295B | 20,000 active employees | $14,700 per employee. |
| NYC Employees Retirement System | $1.825B | 100,000 active city employees | $18,200 per employee. |
| Police Pension Fund | $2.393B | 35,000 police officers | $68.400 per police officer. |
| Fire Pension Fund | $1.200B | 11,000 firefighters | $109,100 per firefighter. |
There is also a $.552B cost in the budget that is unassigned to any of the five funds but clearly stated in the budget for FY-2018.
In 2000, the NYS Legislature passed a law which changed the contribution requirement for Tier 4 members of all public retirement systems in New York State.
Starting in 2000 any Tier 4 pension member who had earned 10 or more years of credited service no longer had to contribute the standard 3% payroll pension deduction. By 2012, just before the Tier 6 modification of Tier 4 removed the 10 year cutoff of the 3% contribution requirement, there were approximately 135,000 NYCERS Tier 4 members who were entitled to this 10 year cutoff.
This 10 year cutoff obliged NYCERS to confirm exactly when a Tier 4 member had earned 10 years of service. This was not just the member’s 10 year anniversary of joining NYCERS.
Specifically, this meant that NYCERS had to determine exactly when a member earned and paid for 10 years of service. In addition, NYCERS had to blend into this calculation any of the member’s prior service buyback applications. Buyback payments could be fully completed before the 10 year cut over occurred or they could overlap the 10 year boundary. In which case, the 10 year boundary was a moving target, since buyback service counted towards the 10 year service requirement after two years of membership service earned after joining NYCERS.
Needless to say this inspired a huge increase in early service buybacks. Four years of buyback purchased after the second year of membership could provide relief from paying four years of regular 3% contribution. Buying the service after completing the ten years of membership, however, would provide no added relief.
To automate this process I directed the IT staff to develop a required amount system that computed the required 3% contributions that each member needed to have on account at NYCERS to be credited with 10 years of service. This included all service that the member had worked as a member, transferred from another NYS system, or that the member had applied to purchase under the buyback law. The system also displays what the member has actually contributed at that point.
At the start of every year, driven by the service history system, a list of Tier 4 members were marked for review during the year as candidates for earning 10 years of service. As part of the review, staff would use the required contribution system to check whether the member had the needed contributions plus interest earned for the 10 year cutoff date. The system allowed for a request for any date. This enabled staff to hone in on the specific date that the 10 years was achieved.
This means that every Tier 4 member should have been checked for required contributions in or around his/her 10 year service date.
So why is NYCERS sending deficit letters to Tier 4 members after they have applied for retirement when they should all have been checked at their 10 year service date? We all know NYCERS must correct its errors. The question is why is NYCERS making the errors in the first place, especially for an agency that is so well funded?
Also why is it taking six to eight months as opposed to two or three months to produce option letters for new retirees? Forget about updating the old legacy IT systems. Thank god those systems are still working.
As far as notice and transparency, it is clear to me that the information from this and many other in-house systems should have been made available on the NYCERS website over the last 12 years.
Closing note: NYCERS will need an extremely bright experienced honest manager to fill the position of Executive Director. There are massive problems that have built up over the last 12 years that this person will have to correct.
Quick Note for NYCERS Members:
If you are getting divorced and your pension is being divided up, be very careful about how your DRO is worded.
For example,
Your vested benefit at age 45 is 1.67% * 15 * $50,000 = $12,300.
Your retirement benefit at age 62 is [((2% * 30) + (1.5% * 2)) * $100,000] = $63,000
If your DRO only specifies that your former spouse is to receive 25% of your pension when you retire, then your former spouse will receive 25% of $63,000, and not $12,300.
In contrast, if you had left city service on the day you were divorced, your former spouse would receive only 25% of $12,300.
You should be aware of how this will play out if you continue to stay in city service.
If your DRO only specifies an open ended percentage, your former spouse will be gaining increasing benefit from your employment after the divorce.
