Bye-bye, pension reform?

by E.J. McMahon |  | NY Torch

The inevitable is now official: Assembly Speaker Sheldon Silver today said Governor Cuomo should “work out” his proposed Tier 6 pension reform with public-sector labor unions. As the governor himself pointed out just last week, the Legislature effectively prefers to give unions a “veto” over any change–which, if it sticks, means there will no meaningful change at all.

Remember–public pension benefits are determined by statute and do not have to be negotiated with unions. Indeed, since the 1970s they have been a handful of “prohibited” subjects of collective bargaining under the state Taylor Law; i.e., strictly speaking, any change to pensions negotiated with a union is unenforceable.  Unfortunately, both the Legislature and previous governors, most recently David Paterson in 2009-10, have sought the unions’ permission before enacting changes in pension benefits — which is why those changes have not, for the most part, been significant. Tier 5, which unions now like to cite as an example of major sacrifice, mainly restored the benefit structure put in place with their permission under Tier 4 in the early 1980s–before a series of sweeteners over the next two decades.

This is a huge test for Cuomo. If he just wants a deal, any deal, he negotiate some tweaks to Tier 5, call it a landmark, and walk away with far less than he has proposed.

Unfortunately, as reported a few days ago, the governor himself may be initiating pension reform talks with unions.   So it may already be all over except the dissembling.  Get ready for another “landmark”!



- E.J. McMahon is the Research Director at the Empire Center for Public Policy.