Harry Nespoli Fails to File a Final Appeal to Protect the Pension Rights of His Union Members

In January 2017, I wrote a post about how NYCERS was stripping pension rights from Tier 4 members who became sanitation workers after 4/1/2012 based falsely on the new Tier 6 law.

To make this issue simple, Tier 6 does not force Tier 4 members into Tier 6-3 just because the member becomes a sanitation worker and even if it did, it would be unconstitutional.

In November 2016, four and a half years after the passage of Tier 6 NYCERS changed its previous position on this issue and began sending notices to certain Tier 4 sanitation workers that their Tier 4 Sanitation benefits were being revoked and they were being forced into Tier 6-3 Sanitation benefits.

On 11/15/2016 Harry Nespoli filed a complaint in court against the NYCERS Board of Trustees attempting to reverse this blatant attack on his union members' pension rights.

NYCERS Board of Trustees

There are three votes out of seven on the NYCERS Board of Trustees controlled by the three largest city unions. Nespoli was and continues to be head of the MLC, the organization representing all city unions. It is not clear whether Nespoli spoke to the three union reps on the Board of Trustees about this issue. There should have been a full debate about this issue at a board meeting. This would have been the best way of handling this issue and preventing unnecessary litigation.

The Six Other NYS Pension Systems

In addition, there are implications of this issue for the other six NYS pension systems.

For instance, I have a strong suspicion that
a 2008 Tier 4 NYCERS member who joined NYPD in 2013 is covered by Tier 2 police pension benefits and
a 2011 Tier 4 NYCERS member who joined NYPD in 2013 is covered by Tier 3 pre-Tier 6 pension benefits.

This is counter to the NYCERS position.

Trial Court

Four and a half years later, on 6/10/2021, the trial court reached a court decision on this issue. The trail court incorrectly decided that NYCERS was an expert on pension law and confirmed its unfounded actions.

Nespoli appealed the trial decision.

First Department

On 5/5/2022 the First Department Appellate Court upheld (case # 02096-2021) the incorrect trial court decision. It discarded the constitutional pension protection clause with only the following statement which is, on its face, factually incorrect.

Petitioners’ reclassification did not violate the New York State Constitution (NY Const art V, § 7[a]), since “petitioners were never entitled to [SA]-20 benefits to begin with and, thus, did not have a contractual right to those benefits” (Matter of Ly, 189 AD3d at 1413).

In fact, on March 30, 2012, every Tier 4 NYCERS member was eligible to be covered by the SA-20 plan if he or she became part of the Uniform Sanitation Force. The court is saying they did not, in complete denial of reality. What we have here is a blind umpire.

On April 1, 2012, Tier 6 can not take away a pension right that existed on March 30, 2012, the day before. The scary thing about this decision is that there is no rational argument supporting it.

Court of Appeals

There is no record on the court website that Nespoli filed an appeal to the NY Court of Appeals. This is a constitutional issue and there are impacts for the other six NYS pension systems. It is clear that this issue should have been taken to the Court of Appeals.

Of course, this was the same time that the City and the MLC were busy trying to deprive city retirees of their Medicare supplemental health insurance benefits in order funnel the money saved into union welfare funds.

NYS Constitution

The following is the text from the N.Y. Constitution Article V, § 7:

"The rights of public employees are thus fixed as of the time the employee becomes a member of the system. We have consistently held that the constitutional prohibition against diminishing or impairing retirement benefits prohibits official action during a public employment membership in a retirement system which adversely affects the amount of the retirement benefits payable to the members on retirement under laws and conditions existing at the time of entrance into retirement system membership. "

I

Lets Get Something Straight About the Health Insurance Stabilization Fund - It's the City That Is Raiding It, Not Senior Care.

I just read a letter written by the president of the local representing NYC correction officers. He was trying to defend his vote to sell out retirees health benefits. He starts out moaning about the Health Insurance Stabilzation Fund (HISF). He states that rising health care costs are diminishing the HISF.

The City and the unions have been crying over the HISF ever since this attack on retirees started. So below is the income statement chart for the fund since 2012. I've only included the main items.

The fund has only paid GHI $378M over the eleven year period.

But over the same period the HISF fund has paid:

1. the City $1.889B ($77M every year plus a $1.0B bonus in 2015).
2. the union welfare funds $996M and
3. other discretionary benefit providers $654M.

Payments to the City, the welfare funds, and the other benefit providers are controlled by the unions and the city subject to collective bargainning. You know collective bargainning, where the unions fight with the City to get what they deserve and not give things back to the City.

Income Statement History for the HISF

Fiscal Year	Opening Balance	1984 HBA City Contib Pay In	City Liability Pay In: GHI less than HIP	Other Benefit Pay Out	Welfare Fund Pay Out	2009 HBA City Refund Pay out	GHI Pay out: GHI greater than HIP	CBA City Refund Pay out	Closing Balance
2012	$587M	$35M	$465M	$48M	$38M	$112M	$0.0M	$0.0M	$894M
2013	$894M	$35M	$0.0M	$39M	$38M	$112M	$0.0M	$0.0M	$744M
2014	$744M	$35M	$1.162B	$40M	$38M	$112M	$50M	$0.0M	$1.706B
2015	$1.706B	$35M	$336M	$45M	$38M	$112M	$100M	$1.0B	$789M
2016	$789M	$35M	$1.202B	$43M	$52M	$112M	$8M	$0.0M	$1.829B
2017	$1.829B	$35M	$54M	$57M	$188M	$112M	$0.0M	$0.0M	$1.586B
2018	$1.586B	$35M	$232M	$57M	$38M	$112M	$2.0M	$0.0M	$1.643B
2019	$1.643B	$35M	$136M	$27M	$81M	$112M	$39.3M	$0.0M	$1.587B
2020	$1.587B	$35M	$0M	$83M	$171M	$112M	$3.9M	$0.0M	$1.369B
2021	$1.369B	$35M	$154M	$74M	$160M	$112M	$175.9M	$42.8M	$1.031B
2022	$1.031B	$35M	$0.0M	$136M	$100M	$112M	$0.0M	$0.0M	$900M

The MLC (DC-37 and UFT) and the City Attack on Senior Care

Along with the garbage about the HISF, this president had the gall to say that the MLC only voted to adopt the Aetna Medicare Advantage plan and not the termination of Senior Care. The City was required by a collective bargainning agreement to get the approval of the MLC before it terminated the GHI Senior Care contract. This union wants to hide the fact that it was part of the crime.

I hope every Correction Officer, who has to retire on disability and collect Social Security benefits, knows that he/she will get hammered with the Medicare Advantage crap. This is not about Aetna, all Medicare Advatage plans are inferior to Medicare with a supplemental plan.

I hope I don't have to tell anyone how to deal with statements from insurance companies. We have a massive legal industry based on this situation.

Tier 4 Sanitation Workers Being Forced into Tier 6 - also Correction Officers and DA Investigators

Two months ago in the beginning of November, NYCERS started sending letters to a group of Tier 4 Sanitation Workers. The letters stated that NYCERS had incorrectly put them in the Tier 4 Sanitation 20 Year Plan.

This group of Sanitation Workers had NYCERS membership dates prior to April 1, 2012 but had stared working as Sanitation Workers after April 1, 2012, the date that Tier 6 became effective. Originally, NYCERS had correctly placed these members in the Tier 4 Sanitation Plan.

Now NYCERS, ignoring their pre April 1, 2012 membership dates, was stating that since they started working as Sanitation Workers after April 1, 2012, NYCERS was stripping them of their Tier 4 rights and putting them in Tier 6. This was a serious reduction in their benefits. This problem will continue to occur whenever a Tier 4 member becomes a Sanitation Worker, Correction Officer, or DA Investigator.

In New York State the pension rights of state and local government employees are protected from being reduced by the N.Y.S. Constitution, Article V, Section 7. (Klienfeldt v NYCERS, 36 NY.2d 95 (1975) and CSEA v Regan, 71 NY2d 653 (1988))

In addition to violating members' contractual rights guaranteed under the N.Y.S. Constitution, NYCERS provided

1. no legal analysis supporting this change in procedure,
2. no pre-deprivation hearing to the members to allow them to challenge this negative decision,
3. no notice to these members that they have 120 days to file an Article 78 in N.Y.S. Courts to fight this arbitrary and capricious decision.

And finally in classic NYCERS fashion, these letters were not signed.

To rub salt in the wound, NYCERS told these members that all of their Tier 4 Sanitation contributions plus interest would be refunded to them along with the resulting tax liability that would adhere to that refund. Of course, they will have to repay this money with interest in the Tier 6 plan.

I now know that there are comparable groups of Correction Officers and DA Investigators who have been illegally forced in Tier 6. I'm not sure whether they were all given notice.

The NYCERS operating budget is fully funded by the assets of the members and retirees of NYCERS. Why is NYCERS so hostile to the membership? This atrocious legal decision by both D'Alessandro and Mazza is another sign of the total chaos occurring at NYCERS.

Listed below is the new wording added in 2012 which created the Tier 6 Sanitation/Correction membership. A member becomes subject to an article of the Retirement and Social Security Law as of their membership date not their employment date.

25. "New York city uniformed correction/sanitation revised plan member" shall mean a member who becomes subject to the provisions of this article on or after April first, two thousand twelve, and who is a member of either the uniformed force of the New York city department of correction or the uniformed force of the New York city department of sanitation. (Section 501.25 of the NYS-RSSL)

Structure of the CO-VSF

The CO-VSF Board has five trustees, the NYCERS chair(one vote), the Comptroller (one vote), the Finance Commissioner (one vote), the head of COBA (one & half votes) and the head of the Correction Captains union (half vote). By statute the NYCERS actuary is the actuary for the Co-VSF. I am not sure when the CO-VSF Board last met. This board along with the actuary should be publicly informing the CO-VSF retirees what is happening with the 2016 payments and providing them with supporting documentation. With modern technology this is an easy lift.

CO-VSF is required to publish a financial statement every year in the City Record - NYC Admin Code - § 13-194.7

7. The variable supplements board shall publish annually in the City Record a report for the preceding year showing the assets of the correction officers' variable supplements fund and a statement as to the accumulated cash and securities of such fund as certified by the comptroller, and shall set forth in such report such other facts, recommendations and data as the board may deem pertinent.

NYS DFS has issued only one audit of the CO-VSF system.

The following text is from that audit:

A. History

Chapter 657 of the Laws of 1999 established the Correction Officers Variable Supplements Fund (“COVSF” or the “Fund”) and the Correction Captains’ and Above Variable Supplements Fund (“CCAVSF”). Chapter 255 of the Laws of 2000 (“Chapter 255/00”) combined the COVSF and the CCAVSF into one amended fund (Correction Officers Variable Supplements Fund) effective December 29, 1999.

The Fund operates pursuant to the provisions of Title 13, Chapter 1 of the Administrative Code of the City of New York (“ACNY”). It provides supplemental benefits to members of the Uniformed Correction Force (“UCF”) that retire on or after July 1, 1999, with 20/25 or more years of service from the New York City Employees’ Retirement System (“NYCERS”).

Under current law, the Fund is not to be construed as constituting a pension or retirement system. Instead, it provides supplemental payments, other than pension or retirement system allowances, in accordance with applicable statutory provisions. The New York State Legislature has reserved to itself and the State of New York the right and power to amend, modify, or repeal the Fund and the payment it provides.