Did Governor David Paterson forget why he vetoed a bill that virtually locks in health benefits for retired state and local government employees? Or does he believe retired teachers are more deserving?

The Tier 5 bill, which promises more than it delivers, goes beyond creating a new pension tier for future employees. It makes permanent a temporary law that says financially-strapped school districts cannot modify lifetime health benefits of retired teachers–unless its teachers union agrees with imposing the same reductions on current teachers.

In September 2008, Paterson vetoed a similar one-year moratorium that would have applied to all retired state and local government employees, not just teachers. In May 2009, he signed a bill extending a temporary moratorium for retired teachers for another year.

In his veto message, Paterson wrote the bill could thwart” legitimate efforts to change retiree health benefits in ways that reflect their unique status, or reasonably improve efficiency.”

He pointed out while many retirees are eligible for Medicare, most active employees are not.

Yet under this bill, even if a corresponding change in active employee benefits is unwarranted due to their different circumstances, one would have to be made (if possible) before any change for retirees could be effectuated. Further, efforts by a public employer to save retiree health care costs by increasing the role of managed care,or by requiring that certain purchases be made through a network, could also be subject to court challenges as diminutions of benefits.

After vetoing the bill, Paterson appointed a 15-member Task Force on Public Retiree Health Benefits, chaired by Richard A. Berman, president of Manhattanville College. It was supposed to report in June 2009.

So where is the taskforce report? Was it written in invisible ink? Or did Paterson forget about the taskforce just as he’s forgotten about his veto of the retiree health bill a year ago?

As reported here earlier, the bill Paterson vetoed would have no fiscal impact for the state and local government.

It ignores the fact that post-retirement health benefits are consuming an increasing portion of local budgets. For example, in 2005-06, the city of Syracuse spent $27 million on health benefits for retired municipal and school district employees–equivalent to 30 cents of every local property tax dollar collected that year.

Originally Published: NY Public Payroll Watch