Facing a series of what they describe as spikes in their pension costs, employees of the state’s major teachers union are facing possible pension benefit reductions, which are needed to keep the union from becoming insolvent in the next few years according to a letter obtained by the Times Union.

The letter, which went to local presidents of New York State United Teachers this week, says that officers of the union are willing to “significantly reduce our benefits,” in order to dodge a looming financial crisis.

While it doesn’t detail how those benefits would be lowered, much of the letter talks about the growing costs of NYSUT pensions for its own retirees.

Due to a series of factors including low interest rates – which decrease the return generated by the union’s investments – as well as longer lifespans among retirees, NYSUT faces a series of pension cost increases that, if unaddressed, could deplete the union’s reserves in five years.

The letter makes it clear that this impacts the employees of the union, not the teachers they represent.

Public school teachers in New York get their pensions from the state Teachers Retirement System. And as public employees, they are shielded by the state Constitution from pension reductions.

NYSUT employs almost 500 people.

While they have representatives across the state, many are based at the union’s headquarters in Latham, where staffers were taking the week off as part of an annual union-wide vacation period in July.

“While NYSUT’s pension plan for its employees remains stable in the near term, historically low interest rates combined with rising costs pose challenges down the road. The organization is prudently and diligently addressing these challenges through collective bargaining talks with its employees. … As NYSUT fiercely advocates for the retirement security of its members, it is equally committed to the retirement security of its staff,” Deborah Hormell Ward, NYSUT’s director of communications, said in a prepared statement.

Most NYSUT employees are represented by three unions, a local of CWA, a Legal Staff Association and Professional Staff Association, the largest.

PSA President Elizabeth Vignaux, stressed that the pension is currently in “great shape.” But they realize the changes are needed going forward.

She said their concern is that the pension talks are being combined with talks over their current contract which expires in five weeks.

“It started as a conversation about the pension and it morphed into the contract talks,” she said.

Because of a “firm no contract, no work” clause, Vignaux said that is adding an element of undue pressure to work out the pension cuts as part of the contract.

“We are not going to be bullied into pension changes,” she said, although, she added that “Our aim is to get our contract done and our aim is to make thoughtful pension changes over the next few years.”

The letter, which urges recipients not comment or discuss the situation on social media, isn’t the first inkling that NYSUT faces financial challenges.

Last winter, the Times Union reported that the union had reported $416 million in future liabilities, primarily pension and health care costs for staff members.

At the time, they said the liabilities could drop if interest rates were to rise as little as a point – since the union could then derive more money from investments such as in the bond market. But that hasn’t happened.

NYSUT employees tend to be well paid, with scores earning six-figure salaries, according to earlier reports. Many are professionals or experienced labor specialists who negotiate on behalf of teachers with local school boards.

The letter says that in addition to low interest rates, the problems are also the result of the 2008 recession and mortality tables, which suggests retirees are living longer – and drawing pensions for more years.

Having more retirees than employees who pay into a pension fund presents an obvious problem, observed David Freidfel, director of state studies for the Citizens Budget Commission, which follows government spending.

“You have less money coming in than going out,” he said.

The idea of a pension spike, or increases needed to meet retiree obligations, also occurs in the public sector, noted E.J. McMahon of the Empire Center for Public Policy, a fiscally conservative think tank. But when public pension costs rise or spike, the government can look to taxpayers to make up the difference.

That’s not the case with NYSUT. While it represents public employees, the union itself is a private organization.

Additionally, school districts and other government bodies are constrained by state laws such as the Triborough Amendment, which keeps in place cost drivers such as the annual “step” or longevity raises given to most teachers, even if they don’t have a settled contract.

Whereas NYSUT can negotiate lower benefits for its own employees, McMahon said “School districts don’t have that choice. In fact, they have to keep giving raises to people.”

© 2016 Times Union

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