An Agency Adrift - the Legacy Replacement Project on Life Support

During the 12/12/2024 NYCERS Board of Trustees meeting, the executive director, Melannie Whinnery, presented the FY-2024 budget reconciliation report. The key item in the report was that NYCERS had only spent $130.3M, which was $38.1M less than the budgeted amount of $168.4M.

The cause of the shortfall was reported to be mainly due to:

1. $27.2 M delayed payments for the Legacy Replacement Project (LRP, an IT upgrade project) because of the delayed implementation of the project and
2. $9.0 M unspent payroll allocation because of difficulty in hiring new authorized personnel.

The LRP shortfall

In the FY-2024 budget, the LRP project was budgeted at $61.03M for consulting services. I guess we can assume that, in spite of the shortfall and delays, NYCERS did pay $33.83M ($61.03M-$27.20M) for consulting on the LRP project in FY-2024.

Listed below are the official NYCERS budget and ACFR non-payroll costs for the previous eight years:

Non-Payroll Shortfalls

Year	Budgeted	Actual	Underspent
2024	$98.0M	$69.8M	$28.2M
2023	$90.4M	$47.8M	$42.6M
2022	$84.5M	$52.7M	$31.8M
2021	$50.2M	$38.7M	$11.5M
2020	$45.9M	$31.9M	$14.0M
2019	$43.5M	$38.4M	$5.1M
2018	$21.8M	$19.2M	$2.6M
2017	$20.9M	$20.2M	$0.7M

Since FY-2020, as seen in the table above , NYCERS has been significantly underspent the budgeted amounts for its non-payroll expenses with the LRP project being the big-ticket item.

The LRP project was proposed in the spring of 2015 and was originally to start in FY-2016. Miscellaneous components of the project finally did get started in FY-2018. An RFP for the LRP was issued in December 2017. It was, however, withdrawn six months later in June 2018.

The current executive director was hired in the fall of 2017

In FY-2021 the LRP contract was finally awarded to Accenture for $85M with a five-year term ending in June 2026. As reported at the December Board meeting, a stripped-down version of Phase 2 is supposed to be in place by the first quarter of 2025.

Phase 1 appears to have been in place by the spring of 2023. It basically entailed the selection of an off-the-shelf commercial pension administration software package, PENFAX. The annual license charges started in FY-2022 and are currently budgeted at $4.4M in FY-2025. This is just for the licenses and not the customized application. The package will need extensive customization which I suspect will be the core work of Phase 2 through Phase 5.

This project is way behind schedule and will be way over budget, assuming it is ever implemented. I cannot overstate the enormous costs that are being incurred by this project. NYCERS never lets on that this project is its tenth year of dvelopment and that it was origianlly a five year project.

Collapse of the Legacy Replacement Project - Update 1/14/2025

I just became aware of a statement in the NYCERS FY-2024 NYCERS financial report, pages 12-13. The report was released in late December 2024, roughly three weeks ago. The statement indicates serious problems with LRP project. Below is the quote.

Quote from FY-2024 NYCERS ACFR

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.

The quote opens with an inaccurate statement that the LRP project started in FY-2021. It started in FY-2016. The project is now in its tenth year, FY-2025. It is also not responsible to say that it will be completed by September 2026.

The real problem, however, is raised in the highlighted text in the quote. As stated in the previous year's ACFR, Phase 2 was projected to "launch" in September 2024. That target has now vanished.

NYCERS states that at some point during FY-2024 a "range of legacy system changes" surfaced which impacted the Phase 2 timeline. At that point NYCERS was in the midest of the ninth year of the project or the third year of the Accenture contract. NYCERS gives no specific details of what the "changes" are and how they impact the project. I suspect that the scale of the legacy systems are overwhelming the standard Penfax software application which NYCERS contracted to handle the legacy functions. This obstacle will either force a redesign of the project with an associated delay or a revelauation of the total project.

NYCERS states that it will discuss a new timeline at the Febuary 2025 Board of Trustees meeting. That should be an interesting meeting.

The new Phase 2.0 is stripped down application that does not support any of the functions of the legacy systems. This minimal application has a delivery date of January 2025. This date is four months after the Septemebr 2024 date for the original Phase 2.

It now appears that the excutive director will be retiring on May 1, 2025 after seven and half years at NYCERS.

This project is out of control.

LRP Costs

For the seven years since FY-2018, the costs for

1. software licenses have increased from $2.2M to $10.8M with a total cost for the seven years of $39.9M, and
2. computer consulting has increased from $3.0M to $40.4M with a total cost for the seven years of $104.4M. Yes, over $100 million.

These significant costs are despite the shortfall in spending.

You would think that there must be members of NYCERS, NYC workers belonging to DC-37, who could do this work more effectively and at less cost.

Note: DC-37 is a NYCERS trustee.

There are eleven consulting companies who have been paid over $2.0M in the last seven years:

Consultants Paid over $2M

1	Accenture	$41.0M
2	Gartner	$12.1M
3	InfoPeople	$8.6M
4	Universal Technologies	$7.5M
5	Rangam Consultants	$5.4M
6	Spruce Technology	$4.2M
7	Blue Hill Data Services	$4.2M
8	Experis US Inc. ---	$2.8M
9	Linea Solutions	$2.5M
11	Computer Management Resources	$2.5M
19	ZebraEdge Inc.	$2.2M

There are another twelve companies who have been paid over $1.0M in the last seven years. That is at least $12M plus.

There are another eight companies who have been paid over $500,000 in the last seven years. That is at least $4M plus.

We are not talking about DOD here. This is just a large municipal pension system, one of five in NYC.

The Staffing Shortfall and the Option Letter Delay

In the spring of 2023, as part of the NYCERS FY-2024 budget presentation, the executive director outlined serious production problems at the agency, especially the delays in producing option letters for new retirees (9/3/2923). Because of these problems the executive director asked for thirty two new full-time employees. The trustees approved only an increase of sixteen employees, raising the agency’s total of full-time employees to 501.

In the spring of 2024, the executive director, in a remote video meeting with the Municipal Labor Committee, projected that the option letter delay would be reduced to six months by the end of July 2024. She did, however, gave herself some leeway in that the agency was having trouble hiring new employees. July came and went without hitting the six-month mark.

As of the December 12, 2024, NYCERS Board meeting, NYCERS staff reported that the option letter delay was at nine months ( November 2024) down from 13 months in the fall of 2023. The new six-month target date was now moved to the first quarter of 2025. It was noted that the number of retirement applications had dropped in 2024, which was a help with decreasing the delay with producing the option letters.

At the same Board meeting the staff attributed the delay in solving this problem to the agency’s failure to hire new employees.

In FY-2021 and FY-2022 NYCERS had no problem hiring forty-five new employees.

Listed below are the official NYCERS budget and ACFR payroll costs for the previous eight years:

Payroll and Fringe Shortfalls

Year	Budgeted	Actual	Underspent
2024	$67.9M	$60.2M	$7.7M
2023	$56.0M	$57.7M	-$1.7M
2022	$51.3M	$52.3M	-$1.0M
2021	$48.1M	$48.7M	-$0.6M
2020	$45.9M	$45.7M	$0.2M
2019	$43.9M	$43.7M	$0.2M
2018	$40.9M	$40.4M	$0.5M
2017	$39.7M	$39.5M	$0.2M

History of NYCERS Administrative Expenses: 2000 - 2024

The following is a of NYCERS administrative expenses from 2000. The information comes from NYCERS Comprehensive Annual Financial Report.

As a point of reference NYCERS had an annual budget of $8.8M in FY-1996, the last year NYCERS was part of the city budget.

NYCERS Admin Expenses

Fiscal Year	Personnel Expenses	Contracts & Consultants	Phone, Mail, & Printing	Rentals	Software, Hardware, Support, Supplies, & Maintenance	Depreciation & Credits	Total
FY-2024	$60,156,204	$42,434,468	$1,236,809	$9,257,263	$17,189,819	$0	$130,274,563
FY-2023	$57,736,915	$19,910,959	$1,037,015	$9,282,322	$17,825,949	$0	$105,793,160
FY-2022	$52,303,943	$27,418,528	$1,029,424	$9,329,701	$14,906,397	$0	$104,987,993
FY-2021	$48,693,043	$14,058,975	$1,290,546	$6,617,040	$16,753,334	$0	$87,412,938
FY-2020	$45,736,806	$11,337,750	$1,173,896	$6,870,614	$12,548,240	$0	$77,667,306
FY-2019	$43,717,712	$15,884,418	$1,114,263	$6,637,059	$14,719,873	$0	$82,073,325
FY-2018	$40,444,145	$4,310,427	$1,072,077	$6,348,888	$7,513,233	$0	$59,688,770
FY-2017	$39,505,894	$3,829,758	$1,561,282	$5,909,352	$8,864,342	$0	$59,670,628
FY-2016	$37,950,289	$4,687,929	$1,360,397	$5,453,383	$7,230,989	$0	$56,682,988
FY-2015	$37,368,409	$3,652,154	$1,336,002	$5,037,893	$7,239,560	$0	$54,635,018
FY-2014	$33,571,938	$3,773,082	$1,269,387	$4,863,720	$6,952,691	$0	$50,430,818
FY-2013	$33,064,087	$3,102,385	$1,078,411	$4,674,442	$6,797,095	$0	$48,666,420
FY-2012	$32,623,085	$3,088,256	$1,096,186	$4,796,584	$9,780,637	$0	$51,384,748
FY-2011	$31,748,443	$4,108,186	$995,415	$4,741,621	$4,780,811	$0	$46,374,476
FY-2010	$31,527,659	$5,434,495	$1,041,471	$4,278,903	$6,678,071	$715,000	$49,675,599
FY-2009	$30,187,604	$4,043,775	$914,311	$4,047,949	$8,198,354	$1,430,000	$48,821,993
FY-2008	$28,344,427	$6,401,745	$997,316	$4,138,211	$5,687,716	$1,430,000	$46,999,415
FY-2007	$27,123,219	$2,677,793	$1,055,233	$5,203,902	$4,205,095	$1,430,000	$41,695,242
FY-2006	$24,992,543	$3,124,688	$1,497,895	$4,797,895	$4,472,246	$1,430,132	$40,291,469
FY-2005	$24,474,710	$3,039,970	$827,277	$4,454,258	$3,118,356	$1,430,296	$37,306,867
FY-2004	$22,631,504	$3,124,800	$845,391	$4,192,543	$3,376,187	$1,430,000	$35,559,081
FY-2003						$1,430,000	$34,101,000
FY-2002						$1,430,000	$31,548,000
FY-2001						$1,430,000	$31,584,000
FY-2000	$15,990,745	$1,587,290	$718,686	$1,531,536	$2,691,719	$725,000	$23,244,976

Climate Change - Private Equity - NYC Comptroller

On October 22, 2024, Comptroller Lander announced a proposal to curtail the activities of private equity firms that enter into future contracts with three of the NYC pension funds. Police and Fire funds are not part of the proposal.

Conceptually this is a positive effort in dealing with climate change. It is, however, not possible to put into effect.

I have been critical of private equity investments for a long time. They are expensive, high risk, illiquid, and, on average, less effective than the S/P 500 index. They are also black box operations that limited partners have no control over. Limited partners, like the pension funds, commit money to the partnerships and hopefully many years later get their money back and possibly some positive return.

The pension fund trustees have no access to the private equity contracts that the Comptroller signs with private equity partnerships. They are “trade secrets”. Once the Comptroller signs the private equity contract, he has no idea what investment decisions that the general partner makes. He also cannot terminate the contract. The idea of restricting the general partner’s decision is not possible.

I will give Lander the benefit of the doubt and assume that he is not aware of the workings of private equity. That is, however, a scary assumption concerning for the NYC Comptroller.

A serious climate change initiative would be to no longer enter into new private equity contracts. It would also be a money saver.

A Better Way: $92B rather than $81B

Assest Allocation

The most important decision that the NYCERS trustees make is the investment asset allocation of the funds of the trust. The asset allocation is a list of types of investments and the percentage of funds assigned to each type or class. Currently the trustees have chosen a complicated and very expensive allocation. The current list of classes and percentages is as follows:

1. US Equities -28.6%
2. International Equities – 11.5%
3. Emerging Market Equities – 4.9%
4. Fixed Income – Structured – 20.9%
5. Fixed Income – High Yield – 4.1%
6. Fixed Income – TIPS -3.3%
7. Fixed Income – Converts – 1.8%
8. Private Equity – 10.5%
9. Private Real Estate7.3%
10. Private Infrastructure – 2.4%
11. Private Credit – 4.4%

As a reference the allocation in 2000 was as follows:

1. US Equities -56.2%
2. International Equities – 14.9%
3. Fixed Income – Structured – 24.8%
4. Fixed Income – High Yield – 4.0%
5. Private Equity – 0.1%

The NYCERS Annual Finacial Statement

Each year, NYCERS issues a financial statement which includes accounting statements and investments results and costs. In particular, the report posts the rate of return for the entire portfolio and each allocation class. Also posted are the investment expenses for the year.

Rate of Return

In the first table below , “Rate of Return” , there is a list covering 1998 to 2023 of

• rates of return (ROR) for the full NYCERS portfolio and
• the ROR for the two classes, 1) US Equities and 2) Fixed Income – Structure.

You will see that since 2002 the average portfolio ROR is 7.13% (22 years), while the average ROR for the two classes, US Equities and Fixed Income – Structured with a 67%/33% allocation is 7.73% over the same 22 years. So how would this difference translate into a change in the NYCERS annual closing balances? I will try to give you an estimate below.

Notes:

• In 2007, both private equity and investment expenses started a steady long term increase.
• In 2015, NYCERS started to report asset rate of returns net of fees. Prior to that returns were reported gross of fees which inflated returns.

Closing Balances

In the second table below, “Closing Balance for NYCERS”, you will see that

• the closing balances for 2001 at $37.30 billion and
• the closing balance for 2023 at $81.4 billion.

That is an average increase of 4.11% over 22 years. This is less than the average portfolio ROR, 7.13%, because each year a part of portfolio return is used to pay benefits and expenses for that year.

You will also see in this table the investment expenses over the 25 years from 1999 to 2023.

Simulated Closing Balances

In order to gauge the effect of using the simple two class asset allocation, I simulated the closing balances from 2002 to 2023 using the two-class investment strategy, I used the closing balance for 2001, $37.3 billion, as the starting base and created the simulated closing balances for each year as follows (see Closing Balance table below):

• for each year I added the ROR for the actual closing balance to the annual delta created by subtracting the portfolio ROR from the ROR of the two-class strategy and
• then multiplying the previous simulated closing balance by the sum of the two percentages plus one to arrive at the simulated closing balance for that year.

In the early years, the portfolio allocation kept ahead of the two-class strategy but by 2013 the portfolio strategy started to steadily fall behind the two-class strategy. By 2023 the closing balance of the two- class strategy was at $91.59 billion while the portfolio closing balance was only at $81.4 billion. Remember that 2015 is the year that NYCERS stared reporting ROR net of fees.

It is reasonable to suspect that the difference between the two strategies may be greater than the $10 billion.

Private Equity and Real Estate LLC's

As of 2007, you will see in the Rate of Return table that the amount of money being allocated to private equity (2018 - real estae LLC) started to grow significantly. The private equity and real estate classes are very expensive. There is also an issue with their assigned values in the actual NYCERS closing balances. The quoted values of these two assets are very unreliable because there are no public markets for these asset classes. The two-class strategy, however, does not have this problem because they both have public markets trading their assets.

Investment Expenses

Finally, if you focus on the investment expense over the 2002 to 2023 period in the Claoing Balance table, you will see that NYCERS paid a total of $3.9 billion of which $2.0 billion was incurred in the last eight years. My conservative projection of the investment expense for the same period using only the two classes is $1.3 billion, a $2.6 billion difference. I based my estimate on the 2002 ratio of investment expenses to the closing balance, 1.14%. >

NYCERS Rate of Return from 2002 to 2023

Fiscal Year	Total Portfolio ROR	Eq - FI only ROR (67%/33%)	US Equity ROR	Struct F.I. ROR	Private Equity ROR	Real Estate ROR	PE assets (in billions)	RE assets (in billions)
2023	8.18%	11.88%	18.07%	-0.68%	0.50%	-1.85%	$8.427	$5.865
2022	-8.39%	-12.62%	-13.64%	-10.56%	25.02%	29.56%	$7.986	$5.672
2021	26.63%	30.21%	45.14%	-0.09%	49.61%	7.75%	$6.422	$4.360
2020	3.58%	6.92%	4.25%	12.34%	1.83%	1.81%	$4.661	$3.802
2019	7.13%	8.40%	8.37%	8.45%	14.66%	8.47%	$4.657	$3.565
2018	8.56%	9.74%	14.71%	-0.34%	17.83%	12.19%	$4.467	$3.398
2017	12.99%	12.23%	18.09%	0.34%	16.45%	10.24%	$9.259	nr
2016	1.52%	3.29%	1.68%	6.56%	6.36%	12.95%	$9.873	nr
2015	3.11%	4.87%	6.35%	1.88%	12.24%	16.06%	$9.825	nr
2014	17.04%	18.90%	24.96%	6.61%	15.20%	13.20%	$9.630	nr
2013	12.24%	15.35%	22.75%	0.33%	8.38%	12.89%	$8.255	nr
2012	1.32%	4.54%	2.23%	9.24%	7.50%	0.99%	$6.748	nr
2011	23.12%	23.55%	32.50%	5.37%	nr	nr	$5.257	nr
2010	14.09%	15.41%	16.33%	13.54%	nr	nr	$4.123	nr
2009	-18.18%	-15.62%	-26.16%	5.78%	nr	nr	$3.263	nr
2008	-4.60%	-6.31%	-12.84%	6.94%	nr	nr	$2.885	nr
2007	18.39%	15.58%	20.02%	6.58%	nr	nr	$1.834	nr
2006	9.83%	5.98%	9.45%	-1.07%	nr	nr	$0.846	nr
2005	9.22%	8.01%	7.91%	8.21%	nr	nr	$0.536	nr
2004	16.03%	13.98%	20.45%	0.83%	nr	nr	$0.286	nr
2003	3.94%	4.45%	0.72%	12.02%	nr	nr	$0.155	nr
2002	-8.64%	-8.64%	-17.05%	8.42%	nr	nr	$0.098	nr
2002-2023 Average	7.14%	7.73%	9.29%	4.58%	14.63%	10.36%
2001	na	na	na	na	na	na	na	nr
2000	9.43%	7.58%	9.06%	4.57%	nr	nr	$0.036	nr
1999	13.47%	13.97%	19.80%	2.12%	nr	nr	$0.000	nr
1998	21.29%	23.21%	28.55%	12.38%	nr	nr	$0.00	nr
Average	8.34%	9.62%
1998-2023 Average	8.04%	8.59%

Closing Balances of NYCERS Assets from 1999 to 2023

Fiscal Year	Invest Fees (millions)	Simple invest fees (millions)	Close Bal (billions)	CB % change	Delta - Portfolio vs Eq&FI only	Improved % Change	Simulated Close Bal (billions)
2023	$489.90	$93.39	$81.40	5.03%	3.70%	8.73%	$91.59
2022	$319.20	$88.92	$77.50	-9.78%	-4.23%	-14.01%	$84.23
2021	$313.20	$98.56	$85.90	22.89%	3.58%	26.47%	$97.96
2020	$245.70	$80.20	$69.90	2.04%	3.34%	5.38%	$77.45
2019	$240.50	$78.59	$68.50	5.06%	1.27%	6.33%	$73.50
2018	$241.80	$74.81	$65.20	6.36%	1.18%	7.55%	$81.77
2017	$223.80	$70.33	$61.30	10.45%	-0.76%	9.69%	$69.12
2016	$213.00	$63.68	$55.50	1.09%	1.77%	2.86%	$64.27
2015	$231.80	$62.99	$54.90	1.29%	1.76%	3.06%	$58.59
2014	$184.60	$62.19	$54.20	14.83%	1.86%	16.70%	$55.27
2013	$183.30	$54.15	$47.20	10.54%	3.11%	13.65%	$47.37
2012	$129.50	$48.99	$42.70	0.71%	3.22%	3.93%	$41.68
2011	$145.10	$48.65	$42.40	19.77%	0.43%	20.20%	$40.10
2010	$175.30	$40.62	$35.40	10.97%	1.32%	12.29%	$33.36
2009	$138.20	$36.60	$31.90	-19.65%	2.56%	-17.09%	$29.71
2008	$115.30	$45.55	$39.70	-6.59%	-1.35%	-7.94%	$35.83
2007	$98.10	$48.76	$42.50	13.94%	-2.81%	11.14%	$38.92
2006	$69.40	$42.80	$37.30	5.07%	-3.85%	1.22%	$35.02
2005	$53.90	$40.73	$35.50	3.80%	-1.21%	2.59%	$34.60
2004	$42.97	$39.24	$34.20	8.57%	-2.05%	6.52%	$33.73
2003	$29.27	$36.14	$31.50	-3.96%	0.51%	-3.45%	$31.67
2002	$37.63	$37.63	$32.80	-12.06%	0.00%	-12.07%	$32.80
Expense Ratio 20202		114.7%
2002 up Avg				4.11%		5.48%
2001	$41.30		$37.30	-12.85%	$37.30
2000	$37.43		$42.80	2.15%	-1.85%
1999	$25.16		$41.90	1.92%	0.50%
1998	na	na	na	na
Total Expenses 2002-2023	$3,921.48	$1,293.52
Diff in Expenses		$2,627.96

Trump v. United States, a Crime in Plain Sight

What does the United States do when justices on the Supreme Court conspire to obstruct the legitimate prosecution of a criminal?

Trump v. United States

The Supreme Court issued an opinion, “Trump v. United States” on July 1,2024. The six Republican justices signed on to the majority opinion. The three Democratic justices filed damming dissents.

The Court’s decision is illogical, without basis in statute, deceptive in its use of civil immunity and separation of powers, and is in clear opposition to the words of the U.S. Constitution (Article3, Section 3), “he (the president) shall take care that the laws be faithfully executed”. See quote below.

Laws are drafted by the Congress and signed into law or vetoed by the President, an equal partner in the process. Legislation is a joint effort by both parties. There is no separation of powers in the passage of laws. In addition, the Constitution directs the president to enforce the laws that he/she has helped enact.

Opinions of the Supreme Court have never been thought of as criminal action.

In Trump v. United States, however, we must seriously consider the reality that the six Republican justices chose to fabricate an obstacle to the legal process of pursuing a criminal prosecution of a former Republican president. Three of those justices were appointed by the same former Republican president who is currently in this case under indictment for four counts of conspiracy and obstruction.

In short, this opinion is so devoid of honest legal logic that it is corrupt.

Accomplice After the Fact

The decisions to grant an appeal to Trump, the delay in issuing the decision, and the decision to grant him immunity from official acts and presumptive immunity for other acts are grounds for an indictment of the six Republican justices under 18 U.S. Code Section 3, Accomplice After the Fact. See quote below.

An accessory-after-the-fact is someone who assists

1. someone who has committed a crime,
2. after the person has committed the crime,
3. with knowledge that the person committed the crime, and
4. with the intent to help the person avoid arrest or punishment.

An accessory after the fact may be held liable for, among other things, obstruction of justice.

A Supreme Court justice has never been indicted in the 236 years of the Republic. It is clear, however, that these six justices have committed a crime. I am not sure whether the six justices considered whether they could be held criminally liable for an opinion that was fraudulent.

Opinions are not infallible. Many are clearly biased but to prevent chaos the parties bend to the decision even if flawed.

This case, however, is profoundly different. It drives a stake into the heart of the Constitution. We have the plaintiff, a former Republican president accused of crimes against the country in violation to his oath of office, claiming immunity from criminal laws that the Congress and the President have enacted, and the six Republican Supreme Court justices falsely giving him a “get out of jail free card”. This puts the entire Constitution and the United States in jeopardy. For the sake of the Republic, we must prosecute this opinion as a crime.

In the end, the justices are all subject to the laws of the United States. These six justices must be held criminally accountable.

I suspect that the Department of Justice is considering this action and that is why Jack Smith asked for a three week delay.

Notes

U.S. Constitution, Article 2, Section 3.

He shall from time to time give to the Congress information of the state of the union, and recommend to their consideration such measures as he shall judge necessary and expedient; he may, on extraordinary occasions, convene both Houses, or either of them, and in case of disagreement between them, with respect to the time of adjournment, he may adjourn them to such time as he shall think proper; he shall receive ambassadors and other public ministers; he shall take care that the laws be faithfully executed, and shall commission all the officers of the United States.

18 U.S. Code § 3 - Accessory after the fact

Whoever, knowing that an offense against the United States has been committed, receives, relieves, comforts or assists the offender in order to hinder or prevent his apprehension, trial or punishment, is an accessory after the fact.

Except as otherwise expressly provided by any Act of Congress, an accessory after the fact shall be imprisoned not more than one-half the maximum term of imprisonment or (notwithstanding section 3571) fined not more than one-half the maximum fine prescribed for the punishment of the principal, or both; or if the principal is punishable by life imprisonment or death, the accessory shall be imprisoned not more than 15 years.

Employers Should Hire Medicare to Manage Health Insurance Benefits

Proposal

Major employers who want to provide health insurance to their employees should seriously consider pushing for a process to enable Medicare to manage paying the medical bills for their employees and then have the employer reimburse Medicare for the charges with a 3% administrative charge. The employer can choose to cover the full cost or have the employees contribute part of the cost.

Medicare is accepted by most doctors and hospitals all over the United States. In my opinion Medicare is arguably the best health insurance in the US even at 80% coverage. The non covered 20% can be purchased at approximately $200 per month. There are no pre-approval obstacles for needed treatments. Medicare has a good reputation for paying promptly. And the reimbursements to Medicare would be significantly lower than the payments for commercial health insurance. The trend line for Medicare annual cost increases is much lower than commercial insurance.

Annual Medical Cost Data for NYC Employees and Retirees

I recently posted a note outlining the increased cost for health insurance for NYC employees and retirees for the FY-2014 to FY-2023 period. I have done further analysis on the cost data from OLR for the period from 2014 to 2024 period.

Using the GHI charge for Senior Care (20% of the amount paid by Medicare) the health insurance cost for the average Medicare retiree & family in FY-2014 was $12,999 based on the $2,599 payment to Senior Care.

The full cost in FY-2024 was $16,404 based on the $3,280 payment to Senior Care. That was a 26% increase over ten years.

In contrast, the cost for the average employee and family was $10,949 in FY-2014 and $24,325 in FY-2024 (GHI coverage). That is a 122% increase over ten years

The cost of the average non-Medicare retiree and family was $13,080 in FY-2014 and $28,539 in FY-2024 (GHI coverage). That is a 118% increase over ten years.

Medicare retirees usually have more health benefit claims than employees but have smaller families. So, the levels of claims are probably very comparable but not the costs. EmblemHeath administers GHI coverage for NYC. NYC pays EmblemHeath 96% of its $8.4B annual health insurance costs.

Recap

NYC Average Annual Health Insurance Costs

	FY-2014	FY- 2024	% increase over 10 years
Senior Care Costs (20%)	$2,599	$3,280	26%
100% Medicare Retiree Costs	$12,999	$16,404	26%
Employee Costs	$10,949	$24,325	122%
Non- Medicare Retiree	$13,080	$28,539	118%

Reality Finally Caught Up With the NYCERS Budget: FY-2004 to FY-2025

In a June 17, 2022 posting, I outined the history of NYCERS administrative budget.

On May 9, 2024, the NYCERS trustess adopted the FY-2025 admin budget.

It was a 0.05% increase over the FY-2023 budget. See the updated table below. The City finally put the brakes on the NYCERS administrative budget.

Interestingly, the fringe benefit amount increased by 20.74% from the FY-2024 amount. In a very contrary way, NYCERS has significantly underspent its budget appropriation since 2019:

• 2023 - $105.8M
• 2022 - $105.0M
• 2021 - $84.4M
• 2020 - $77.7M

History of NYCERS Admin Budget 1996-2025

Fiscal Year	F/T Count	P/T Count	College Aides / Hourly	PS Budget	OTPS Budget	Fringe	Total	% Increase
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	***