Monday, September 16, 2013

Payroll & Pension - Police & Fire - FY-2014

In its FY-2014 Adopted Budget, NYC has funded

  • 36,164 police officers with a payroll of $3,676.5M and pension cost of $2,320.9M
  • 10,910 fire fighters with a payroll of $1,257.5M and a pension cost of $960.7M.
  • 114,404 teachers with a payroll of $8,987.5M and a pension cost of $2,917.0M
  • 111,642 general workers with a payroll of $8,424.5M and a pension cost of $1.934.0M

Unfortunately, this is the heart of the pension issue for NYC. For every dollar the city pays to a police officer, it is paying 63 cents to the police pension fund and for every dollar it pays to a fire fighter, it pays 76 cents to the fire pension fund.

This is compared to the 33 cents that the city is paying to the teachers pension fund for every dollar it pays to a teacher. Make no mistake, 33 cents is also way out of line but it is far from the insane levels for police and fire.

In addition to the usual investment and funding mistakes the police and fire pension funds have enormous disability burdens, especially the fire fund.

There needs to be a public policy decision made about what is the acceptable pension cost percentage for emergency service employees, teachers, and general government workers. This is the hard point of pension reform.

From calculations ( police , teachers ) that I have done, it appears that for new Tier 6 members (post 4/1/2012) the city will have to make annual pension contributions of 6% of pay for teachers and general workers and 29% of pay for police officers and fire fighters (see note below). Are these percentages acceptable to the voters of NYC?

It is not clear how the disability issue will play out in Tier 6. The benefits are now lower for police and fire. We will have to see if the frequency drops. This is as much a management problem as a pension problem.

I used an annual salary increase assumption of 2.5% for teacher/general workers and 5% for police and fire. I used a 5.5% pre-retirement assumed rate of return and a 5% post-retirement return. This also assumes that the actuary directs the city to contribute at least 6% and 26% every year and that the trustees adopt an investment policy that earns a 5.5% annual rate of return, a reasonable target.
I've done some research on police salaries and 7% is a more realistic salary increase rate. This increases the employer contribution rate (Tier 6) to 29%

Thursday, September 5, 2013

The Haze Over the Disaster Recovery Site at Long Island City - 2013

On March 14, 2013 the NYCERs Board of Trustees adopted resolutions approving the NYCERS administrative and loan operating budgets for FY-2014. The administrative budget was $44.6M with an added $7.6M for fringe benefits. The loan budget was $1.7M with $.3M for fringe benefits. The loan budget is totally paid by the active members through fees for loans. The executive director, Diane D’Alessandro, provided a two and a half page justification for these expenditures.


In September 12, 2011 posting, I wrote about the fiasco surrounding the NYCERS disaster recovery (DR) site at Long Island City (LIC). At the time there was a five year delay in opening the DR site.


In her February, 2012 justification for the FY-2013 NYCERS administrative budget D’Alessandro referred to the DR site issue as follows:

“The build-out of the business continuity site is nearing completion. Once the construction phase is finalized, the installation of the secondary data center will commence. This final phase will extend through FY-2103. Upon completion, the secondary data center will be equipped with a mainframe computer and have the capability for site-to-site data replication and data updating allowing for the eventual elimination of the Sterling Forest backup site. In an emergency, the LIC will have the capacity to house approximately 300 staff working on a two shift model. During normal business, the facility will be utilized for document management, training and IT testing and backup functions.“

In a July 13, 2012 posting, I commented on D’Alessandro’s failure to address the then six year delay in opening the LIC DR site and all the other problems surrounding this project.


Part of the FY-2014 administrative budget is a $2.9M non payroll (OTPS) cost for maintaining the LIC DR site. In her FY-2014 budget justification D’Alessandro makes only the following mention of the LIC site:

“With the completion of the secondary data center at Long Island City (LIC), NYCERS will shift its focus to restructuring the Adams Street data center. Proposed upgrades will improve the utilization of space and enhance cooling, heating and air flow systems. This effort will provide greater energy efficiency, expanded storage capacity and improved functionality.”

From this terse comment you might assume that the DR site is fully functional. You will notice, however, that there is no mention of the actual completion date of the site, the award of a certificate of occupancy or the passage of fire inspection for the LIC site. There is also no mention of maximum occupancy for the site and there is no mention of a full operational test of the site. Remember the original 2006 lease renewal comes up in FY-2016, just two years away.

Given the history of this project it is quite possible that the site is not operational at all in spite of D’Alessandro’s attempt to give that impression. Of course it now seems that replacing the air conditioning unit in the computer room at Adams Street is the new hot item. At least, it appears that is what she is talking about. "Restructuring" and "Upgrades" are not words loaded with a lot of information.

Tuesday, September 3, 2013

What Happened to the Perjury Investigation at NYCERS - Thompson & de Blasio

In 2009, four years ago, the Public Adovcate and the Comptroller, both NYCERS trsutees, requested D.O.I. to investigate a charge of perjury and official misconduct by senior management at NYCERS. As of today there has been no resolution of those charges. The trustees made this request in response to specific evidence that I had given to the trustees of the perjury by NYCERS senior staff.

In 2009, Bill Thompson was a NYCERS trustee and the Public Advocate's office made the actual request for the investigation. In 2010, de Blasio became the Public Advocate and a NYCERS trustee.

Thompson and de Blasio are now running for mayor of New York City. Shouldn't they clear up this unfinished business before they take on the responsibilities of mayor? Scott Stringer was also a NYCERS trustee in 2009 and has equal responsibility for cleaning up this mess.