Financial disclosure filings made public yesterday have revealed that Governor Andrew Cuomo has a net worth of at least $1.75 million. But in one sense, that doesn’t actually make him unusual among New York government employees at his level of education and experience.
Imagine an alternative career history for the governor, in which Cuomo decided not to pursue a career in law and politics. Instead, after graduating from Fordham in 1979, he went straight to work as a public school teacher in, let’s say, the city of Yonkers. Today, after 34 years in the classroom, he’d be a Tier 3 retirement system member making a salary of $118,709.* And, having turned 55, he’d be eligible to immediately retire with a pension of $78,384, which has a net present value equivalent of nearly $1.6 million — i.e., it would cost a man Cuomo’s age $1.6 million to purchase an annuity worth $78,384 a year for the rest of his life.**
The hypothetical Cuomo-as-teacher example illustrates an aspect of public-sector compensation that government employees themselves often fail to recognize: by the end of their careers, their constitutionally guaranteed pension benefits effectively make them millionaires. Indeed, after 30 or more years on a state or local payroll in New York, the majority of public employees in jobs requiring professional degrees have earned pensions that effectively push their net worth over seven figures. So do most police and firefighters, including virtually all uniformed public-safety employees in the downstate region. These pension net-worth values, some of which can be simulated using the calculator at NyPensionBomb.com, don’t include the added value of lifetime health insurance coverage, for which most state and local employees also qualify. Heavily subsidized health coverage would typically add at least $100,000 or so to the total lifetime value of a career government job.
Because it excludes the value of the public pension he has already earned, Cuomo’s net worth is actually understated by the state’s financial disclosure formula for public officials, which only counts the value of corporate equities and other financial investment assets. If he left office today, after four years as attorney general and two years as governor, Cuomo could start collecting a $17,800-a-year pension once he reached age 62.*** A male of the same age would need $329,848 to purchase an annuity yielding that income stream. If Cuomo serves an additional full term as governor, leaving office at the end of 2018, he will qualify for a pension of $35,600, which currently equates to a net present value of $536,555.
* Assumes that, along the way, he earned a master’s plus 30 graduate credit-hours, not at all atypical for a senior teacher.
** The minimum retirement age for fullk benefits was raised to 62 for Tier 5 teachers and 63 for Tier 6 teachers, and lifetime employee contributions in the new tiers are also higher. The Tier 5 benefit is essentially the same as the Tier 3 and 4 benefit, while the Tier 6 benefit formula for the hypothetical Cuomo-as-teacher example would yield an income about 95 percent of the Tier 3 level.
*** It’s not clear whether Cuomo was credited with pension system service for his two years as a $1-a-year advisor to his father, Governor Mario Cuomo.