My concern about the consequences of all the retroactive pension increases scored by the public employee unions in deals with the politicians they controlled, and subsequent cuts in pay and benefits future workers, tax increases and service cuts, is longstanding. When I ran a protest campaign against the local NY state legislator back in 2004, for example, it was specifically mentioned as a cause of my outrage. Along with other factors such as the chronic underfunding of the New York City schools, due to an unfair state school aid formula.
While previous pension deals caused me to feel great concern about the future of public services and benefits, however, the 2008 retroactive pension increase for New York City teachers was enough to change my entire worldview. Unlike all the pension deals around the year 2000, there was no 1990s stock market bubble to use as an excuse. Just raw, completely selfish, “I am the world” power. Funding for the NYC schools had soared, leading to hope for the future, but the pension deal grabbed all that money back away from the classroom, dashing those hopes and leaving the schools no better off than before – despite higher taxes. The cost of this deal may be $20 or even $30 billion. But with everyone in power in on the deal it has become the ultimate “unsaid,” with no one willing to talk about it. But it was talked about on interior pages and blog posts back in 2007 and 2008, and I’ve saved some of that information and (if the UFT hasn’t wiped them out yet) some of those links. It is that information that will be reviewed below. Perhaps someday it can be used as evidence in court. In the meantime, I urge those in the press to look in the mirror and read to the end, where the role of the media is discussed. I’m providing this information gratis. Please use it.
Before moving on to the qualitative information, readers should have already reviewed the data on how much the NYC schools already spend compared with the past, and compared with schools elsewhere, based on education finance data from the U.S. Census Bureau.
The pay and benefits of NYC instructional workers averaged an incredible $272,500 per 20 students in FY 2012. But even so Randi Weingarten, the head of the national teacher’s union and the head of New York City’s United Federation of Teachers at the time the 2008 retroactive pension increase went down, recently claimed New York’s schools were “underfunded.”
And readers should have already reviewed the data, charts and analysis of the Teacher Retirement System of New York City, based on data from the U.S. Census Bureau, recently updated in this post.
The 2008 retroactive pension increase caused payouts by that system to soar by 32.1% in inflation-adjusted dollars from 2008 to 2010, or about $1.1 billion, with additional costs likely as additional beneficiaries retire. That means $1.1 billion in additional pension payments per year, for decades into the future. That deal, multiplied by previous retroactive pension increases, has left the Teacher Retirement System of New York City just 55.6% funded according to an analysis of the Center for Retirement Research at Boston College, among the worst off in the country (see data for individual state and local pension funds in the report Appendix).
The recent analysis from the Center for Retirement Research just confirms its own prior analyses, and the prior work of other actuaries, including independent enrolled actuary John Bury.
Those analyzing the public employee pension disaster have a variety of ideological perspectives, but all agree that when they use the same methods and assumptions to compare major state and local pension plans across the country, New York City’s pension plans are in far worse shape than most – even worse off than the New York State pension plans that cover local government workers in the rest of New York State. Those who are “pro-union” and “pro-pension” either seek to avoid talking about New York City at all, or point to it as an exception that does not reflect how stable other pension funds are.
This is a disaster for ordinary New Yorkers. Future New Yorkers will have to pay more in taxes or accept diminished services to not only pay for all the pension benefits New York City teachers will earn in the future, including all the additional retroactive pension increases that seem to be all but inevitable, but will also have to pay for half the pension benefits NYC teachers earned (or at least got) in the past. All with no public services or benefits in return. And starting from just about the highest state and local tax burden in the U.S. But it certainly isn’t a disaster for the United Federation of Teachers, and its members who live in the suburbs or who have already retired to Florida.
So what was said about the 2008 UFT pension deal back in 2007 and 2008? I highlight certain text in the blog posts and articles in bold/italic. My comments on the evidence from the past are in bold.
Mayor Bloomberg agrees to the pension deal, in exchange for a bogus “merit pay” scheme that made him look good but would later go “poof.” (As shown in articles at the end of this series). For the MSM, the pension part of the deal was not the story, because that’s the story the Mayor told. He had earlier agreed to study it. The legislature had repeatedly passed it without studying it, but it was unsigned. Note that the retroactive pension increase, which cost $billions, is not even mentioned until the very end of the story.
October 18, 2007
Teachers Agree to Bonus Pay Tied to Scores
The Bloomberg administration and the New York City teachers’ union announced an agreement yesterday on a plan that would give teachers bonuses based largely on the overall test scores of students at schools that have high concentrations of poor children.
The plan, negotiated for months, is a major breakthrough for Mayor Michael R. Bloomberg, who for years has advocated extra pay to reward high-performing teachers.
In a bow to the union, the bonus money would go to schools for overall performance, and then would be distributed to teachers. The agreement also gave the union something it had long sought: city backing for senior teachers to retire with full pension benefits, five years earlier than they can now.
In addition, the city agreed to pay $160 million to settle a longstanding dispute over the city’s contribution to benefits for 40,000 retirees and teachers.
Mr. Bloomberg and Schools Chancellor Joel I. Klein announced the deal at City Hall with Randi Weingarten, president of the United Federation of Teachers. Calling it a “historic and unique agreement,” Mr. Bloomberg said, “This agreement puts New York City at the forefront nationally in finding ways to reward such high-needs schools for performance.”
Merit pay programs, which base compensation for teachers on their classroom performance rather than their seniority and academic degrees, have traditionally been opposed by teachers’ unions. But those programs, as well as other incentive pay plans, have been gaining ground across the country in recent years, and the movement is likely to get a major boost with this agreement in the nation’s largest school system.
“I think that this is a major breakthrough,” said Charles Brecher, research director at the Citizens Budget Commission. “This is a step over the line and a movement towards the principle that says we reward merit and not just seniority.”
A later article includes a quote by the same person on what a disaster the deal is.
New York City’s plan, which is contingent on the State Legislature’s expected acceptance of the pension agreement, is a twist on the traditional concept of merit pay. Pots of money would not be distributed teacher-by-teacher but are to be given to schools that have schoolwide gains in student test scores. It will be up to “compensation committees” at each school, made up of two teachers, the principal and a principal’s appointee, to distribute the money. They could choose to distribute it evenly among union members or single out exceptional teachers. They cannot distribute the money by seniority.
This school year, about 200 of the city’s high-needs schools — identified by factors like poverty — would be eligible for about $20 million in bonuses. They would initially be paid for with private money. Next year the plan is likely to expand to 400 schools and to be financed by the city.
The plan would not only give Mr. Bloomberg a policy change he has long sought, but also allow Ms. Weingarten, a potential candidate to lead the national American Federation of Teachers, to cast herself as a reform-minded union leader.
Both the Bush administration and Representative George Miller, the California Democrat who chairs the House Education Committee, have tried to promote the concept of pay for performance. But leaders of the two national teachers’ unions came out in opposition to draft legislation to renew the No Child Left Behind law because it contained a proposal to count student test scores in granting incentive pay.
Indeed, the issue is so sensitive that Ms. Weingarten took great pains yesterday to insist that she did not consider New York City’s new effort to be merit pay. “I think this is a concept that promotes collaboration on a school level,” Ms. Weingarten said. In fact, Ms. Weingarten said, “This shuts the door on the individual merit pay plans that I abhor.”
She said it had several “checks and balances” that distinguished it from plans she has opposed. Union chapters at each eligible school are to vote on whether they want to join the program. Schools are to be judged by their overall performance, not teacher by teacher.
If the schools meet certain performance goals, based largely and perhaps exclusively on test scores, they are to receive an amount that totals $3,000 per teacher.
If compensation committees cannot agree on how to distribute the money, they will forfeit it.
The mayor said he was pleased with the plan.
“In the private sector, cash incentives are proven motivators for producing results,” he said. “The most successful employees work harder, and everyone else tries to figure out how they can improve as well.”
Because the bonuses will be available only to teachers at needy schools, Mr. Bloomberg said he hoped they would “provide our best teachers with an incentive to work in high-needs schools.”
Mr. Bloomberg and Mr. Klein praised Ms. Weingarten for agreeing to the program, saying that while conventional wisdom held that performance-based pay cannot work in cities with strong unions, “Randi and the U.F.T. have proved the conventional wisdom wrong.”
According to a memorandum of understanding between the Education Department and the union, the plan would be evaluated by an “independent entity” that would make recommendations for the future.
Under the changes to the pension plan announced yesterday, there would be a six-month window within which teachers who agree to increase their pension contributions by 1.85 percent of their salaries, will be able to retire at age 55 with full pension benefits as long as they have 25 years of service.
Currently, most teachers need 30 years of service to retire with full pension benefits at age 55.
Teachers hired after the changes go into effect will have to contribute 4.85 percent of their salaries to their pensions for their first 10 years, and 1.85 percent a year afterward. They will be able to retire at age 55 with 27 years in the system.
Mr. Bloomberg said the changes would be “cost neutral” to the city for the first five years and would save “in the tens of millions of dollars” in following years. City officials say that is partly because highly paid retirees will be replaced by younger, less costly teachers.
The $160 million the city agreed to pay would settle a dispute over whether it miscalculated the interest on union members’ pension contributions.
A couple of points. These teachers had been promised retirement at age 62 after 30 years of work. Their pensions had already been increased to a retirement at age 57 after 30 years or work under the 1995 retroactive pension increase. While the pension increase was “retroactive” the extra 1.85% of pay, a fraction of the actual cost, was not. As I have shown that even with it, NYC teachers pay virtually nothing into the pension plan.
How could such increases be “cost neutral?” For one thing, new teachers may cost less when they are hired, but eventually they all earn more. In the meantime you are providing health insurance for both the newly retired teachers and their replacements, something never considered in these deals. Unless you can’t afford the replacements.
The New York Times actually found how all these deals “cost nothing” or “saved money.” Note this article is right after the 2008 UFT pension deal, and the UFT is listed as the man’s clients. This is the kind of thing that has turned John Bury into a crusader in his own profession, who blames pliable actuaries more than unions, taxpayers, or even politicians.
May 16, 2008
Unions Bankrolled Analyst Vetting Pension Bill
By DANNY HAKIM
ALBANY — A bill offering thousands of additional city workers early retirement has been gaining support in the Legislature in recent weeks. New York City officials have protested, saying it would cost the city $200 million annually.
Not so, lawmakers countered. It won’t cost a cent, they said, pointing to the review of a highly credentialed actuary to prove it.
But what the legislators did not disclose, as they cited the expert analysis of the actuary, Jonathan Schwartz, was that Mr. Schwartz had not been paid by the state to conduct his analysis. His work was bankrolled by unions, including District Council 37, the umbrella group of municipal unions that drafted the early retirement bill, which is now moving through the Legislature.
Lawmakers have cited Mr. Schwartz’s analysis on hundreds of bills in recent years, with billions of dollars worth of potential costs. His projections were used to fulfill a legal requirement that every piece of legislation be accompanied by a “fiscal note” that examines its impact on spending. Mr. Schwartz’s consultant work for the unions was discovered during a review of Department of Labor documents by The New York Times this week.
Mr. Schwartz, a former city actuary, said that he routinely skewed his projections to favor the unions — he called his job “a step above voodoo” — and admitted that he had knowingly overreached on the pension bill by claiming that it cost nothing, either now or in future years. “I got a little bit carried away in my formulation,” he explained.
The Senate sponsor of the bill, Martin Golden, a Brooklyn Republican, said on Thursday that he had no idea Mr. Schwartz was a consultant for the unions. Assemblyman Peter J. Abbate Jr., a Brooklyn Democrat and the Assembly sponsor, said the bill was drafted by the union pushing the measure, and that it provided Mr. Schwartz’s analysis.
“It’s their bill,” Mr. Abbate said. “They drew up the bill; they went to Jonathan Schwartz,” he said, adding: “We assume he comes up with the real number. He was hired by them.”
Mr. Schwartz’s review, though, is presented in the legislation after an explanation of language changes, and appears as if it were a governmental analysis, rather than one financed by an interest group. It is the only analysis provided.
To critics of the Legislature, the reliance on Mr. Schwartz’s analyses is a startling example of unchecked coziness between lawmakers and labor and the willingness of many legislators to blindly carry bills handed to them by special interest groups.
On almost every bill involving New York City pension benefits in recent years, Mr. Schwartz has provided the analysis.
“I’m shocked the Legislature would use someone who works for the union,” said Blair Horner, the legislative director of the New York Public Interest Research Group. “This guy might be the best in the world at what he does, but at best there is a clear appearance of a conflict of interest.”
Actuaries are experts in the field of forecasting risk, life expectancies and the future pension liabilities of municipalities and other pension funds.
Mr. Schwartz, 70, who was an actuary for New York City until 1986, said in a telephone interview on Thursday that his connection to labor groups was well known. Asked which unions he serves as a consultant, he responded, “How many unions are there?” He then ticked off a list of his clients, including the United Federation of Teachers and unions representing firefighters, detectives, correction officers and bridge and tunnel officers.
He said: “The Legislature knows full well I’m being paid by the unions. If they choose not to disclose that, that’s on them, not me.”
He still called the city’s estimates that the early retirement bill would cost $200 million annually “off the wall,” saying that “at the very least, that’s high by a factor of four.” But even that would leave the city with tens of millions of dollars of additional annual expenses at a time of growing economic uncertainty.
The bill would offer workers a second chance to buy into an early retirement plan that had been offered in the mid-1990’s.
“What people call actuarial science is at least as much as an art as a science,” Mr. Schwartz said.
“Back in my days as city actuary, I would go to that part of the range that would make things look as expensive as possible,” he added. “As consultant for the unions, I go to the part of the range that makes things as cheap as possible, but I never knowingly go out of the range.”
Mr. Schwartz resigned from his city job in 1986 after admitting he had given false testimony in a deposition in a lawsuit brought by female employees who claimed that their pension payments were lower than those made to their male counterparts.
Farrell Sklerov, a spokesman for Mr. Bloomberg, said, “It is an outrage that union-paid actuaries freely admit that they create artificially low fiscal impact statements in order to help push pension sweeteners through Albany, costing taxpayers millions upon millions of dollars.”
The executive director of District Council 37, Lillian Roberts, declined to be interviewed.
In a statement, she said, “As far as the cost is concerned, actuaries disagree.”
Last year, District Council 37 paid Mr. Schwartz more than $10,000, according to records from the Department of Labor reviewed by The New York Times.
John McArdle, a spokesman for the Senate majority leader, Joseph L. Bruno, a Republican, said, “We use the city’s estimates before we make any decision.”
Dan Weiller, a spokesman for Assembly Speaker Sheldon Silver, a Democrat, said, “The fiscal notes don’t determine whether the bill gets done.”
Both men said that bills received further financial review before approval and that in this particular case they would seek a so-called home rule message, which would require the City Council to approve the measure.
Basically, pension actuaries have been providing whatever findings those who hire them want, no matter how absurd. If they didn’t, they wouldn’t have been hired and paid to provide the findings. Just like the public accountants, bond raters, stock analysts, property appraisers, and executive pay consultants. We’ve had a white collar riot over the past 20 years, during which every single one of these “truth telling” professions has sold out.
Here is another article on the 2008 deal. Note the emphasis given on the small dollar value, temporary, now long gone and forgotten “merit pay” deal” compared with the permanent pension increase whose cost will be probably end up being in the tens of $billions.
October 17, 2007, 3:35 pm
Mayor Announces Plan for Teacher Merit Pay
By SEWELL CHAN
Updated, 6:37 p.m. | Mayor Michael R. Bloomberg announced this afternoon what he called the biggest program of merit pay for teachers in the nation. Under the program, 200 schools — about 15 percent of all schools in the system — will be eligible this academic year for $20 million in privately financed bonuses if student performance improves by a certain amount. In the 2008-9 school year, 400 schools will be available for the bonuses.
The annual bonus would be equivalent to $3,000 per educator, but a committee at each school would have the power to decide how to distribute the money. So under the system, a teacher whose students showed particular improvements on standardized tests would not necessarily receive a greater individual bonus than another teacher at the same school whose students had not shown as much improvement.
The mayor, flanked by Randi Weingarten, the president of the United Federation of Teachers, and Joel I. Klein, the schools chancellor, called the agreement a watershed in his six-year-old plan for educational reform based on mayoral control. In providing teachers for the first time with compensation based solely on student performance and not on seniority, the new bonuses will encourage the best teachers and create an incentive for others to improve, Mr. Bloomberg and Mr. Klein said.
“In the private sector, cash incentives are proven motivators for improving results,” said Mr. Bloomberg, who built a multibillion-dollar business, Bloomberg L.P., before he was elected in 2001.
The bonuses will be raised from private sources, including philanthropic foundations and the Partnership for New York City, the city’s largest business association.
Participation in the bonus program this year will be voluntary. At each of the 200 eligible schools — schools designated as being “high-need” — the principal will have to agree, as well as at least 55 percent of the teaching staff.
At each participating school, school progress reports will be used to track student performance. Schools will be eligible for cash bonuses of up to $3,000 per educator. A four-member compensation committee at each school — made up of the principal, a principal’s representation and two members of the teachers’ union — will have control over how to allocate the bonus money. The committee may use various criteria in deciding how to distribute the money but may not consider seniority — the traditional basis of prerogatives among teachers.
The mayor has experimented with cash incentives for poor people to engage in certain behaviors, like making sure their children attend school, and he defended the notion of extending economic incentives to public employees.
“I am a capitalist and I am in favor of incentives for individual people, yes,” Mr. Bloomberg said at a City Hall news conference that started around 3:30 p.m. “But it depends on the situation and the organization and what the function is. In some cases it’s very easy to measure whether you do a better job than the person sitting to your left or right. In the schools it is a much more collaborative effort.”
The mayor also announced two other agreements with the powerful teachers’ union.
If union members agree, the number of years of service required for a teacher to earn a full pension would be reduced to 25 from 30. In exchange, current teachers would have to agree to a 1.85 percent increase in their pension contributions. A 1.85 percent increase in contributions will also be required from future teachers, who will have to work at least 27 years — instead of 30 — before being able to retire with a full pension.
The minimum retirement age, 55, would not change. Mr. Bloomberg said the pension change would not consist the city any money in the next five years but would “save in the tens of millions of dollars each of the following years after that.”
The minimum age was changing, and had already changed compared with what had been promised through previous retroactive pension increases.
Finally, the city and the union announced that they had settled a longstanding legal dispute concerning retirement benefits for about 40,000 current and retired teachers. The dispute concerned whether the city had properly credited interest earned on members’ pension fund contributions. Under the settlement, the city agreed to supplement the retirement benefits for the affected teachers by $160 million over a period of about 10 years. “This settlement saves the city from potentially significant liability that could have been much greater than the settlement amount,” the mayor said.
Ms. Weingarten, who has led the teachers’ union since 1998, supported the 2002 decision by the State Legislature to give the mayor control of the city’s public schools. Since then she has occasionally clashed with Mr. Bloomberg and Mr. Klein. But today, she emphasized the union’s positive relationship with City Hall, saying that the pension improvements, in particular, would reward those who invest their careers teaching. “You’ve all heard me often talk about how we have to attract and recruit and nurture teachers in order to get the best and the brightest not only to come, but to stay,” she said.
The idea of rewarding teachers for student performance is not a new one. At a panel discussion this week and again today, Mr. Klein said that Albert Shanker — who helped found the teachers’ union and led it for decades — endorsed, before his death in 1997, a system of incentives for rewarding teachers.
As a reporter pointed out at the news conference, the new proposal is not the first time that “pay for performance” has been tried in New York City.
In the late 1990s, the city’s Board of Education and the Partnership for New York City began an experimental program, Breakthrough for Learning, in two Brooklyn school districts, one in East New York and the other in Ocean Hill-Brownsville. The program included some merit-based payment incentives, as well as signing bonuses for principals and discounted mortgages and apartment loans for teachers, but the experiment was not continued.
“We learned a lot from Breakthrough for Learning,” Ms. Weingarten said today. “It was schoolwide, but it was very management-dominated — and it was top-down. It was not the kind of program that we’re suggesting here.”
She added, “We thought that was the right kind of approach, but the implementation, meaning making sure there’s real collaboration and partnership at the school-based level, is what was missing.”
The city comptroller, William C. Thompson Jr., who attended the news conference with the mayor, praised the idea of schoolwide bonuses. In a statement released after the news conference, he said:
There is no question that if we are to attract and retain teachers in New York, that we must be able to create an environment where members of this profession have more reason to hope that they can succeed and thrive. Today we are adding one more incentive to help keep experienced, dedicated teachers in New York. I commend Mayor Bloomberg for adopting a wise approach not only to retain teachers but to improve student performance.
Following the news conference, the United Federation of Teachers also issued a statement. Here are Ms. Weingarten’s quotes, excerpted from the statement:
This agreement creates pro-active programs that address two major issues facing our schools, making the profession economically viable and fostering collaborative learning environments where teachers have real voice.
We are delivering on the promise we made to work with the city on a retirement benefit that could serve as an incentive for teachers to work in and stay with the New York City public school system. This pension benefit makes teaching an attractive lifetime career for new teachers. It gives them an incentive to stay for the long haul. Currently, almost half of new teachers leave in their first five years. We need to slow this ‘brain drain’ because experienced career teachers provide much needed quality and stability for our public school system.
So, if the problem is teachers leaving in the first five years, why wasn’t cash pay increased for those early in their careers? Instead of a devastating increase in cost grabbed for those cashing in and moving out? What a lie that is.
The school-wide bonus plan reflects the core belief and principle of the U.F.T.: students achieve when all the educators in a school work together on their behalf. By fostering teamwork and mutual support, the whole school and all its children benefit.
School-wide bonuses properly refocus the misguided debate over individual merit pay. Respecting and understanding the importance of teamwork and collaboration is precisely why the U.F.T. has opposed the idea of individual merit pay for teachers – especially when based solely on student test scores. This school-wide program recognizes and builds upon a core philosophy that says students learn, achieve and benefit most when all educators in a school collaborate to provide the best possible education.
This school-wide plan generates the kind of spirit and partnership within the school community that make a school great.
The UFT is once again calling for “partnership.” And the latest contract, negotiated with Mayor DeBlasio, once again provides most of the benefits to those cashing in and moving out. We now know that’s what “collaboration” means to the UFT.
Why did Bloomberg do it? Could he have been duped, or believed what he wanted to believe? In a blog post, an old teacher and labor negotiatior explains how the UFT got the original Tier I pension deal – because Mayor Lindsay wanted to run for President. Remember the pension bill passed in early 2008, just as Bloomberg had his “will he or won’t he” Presidential non-campaign. In this case, I suggest the you read the whole thing.
About – blogger Ed.
Career NYC high school teacher, district representative for the United Federation of Teachers, participated in the design and implemention of school-based budgeting initiatives in a school district, instructor at the New School University, reviewer on NYS State Education SURR review process and Redesign Panels, education consultant, created and supported small high schools, represent union members at interest arbitrations and ocassional writer on Edwize.org blog.
Tiers or Tears: Will the Teacher Union (UFT) Trade Pension Benefits for Future Teachers for a New Contract? Randi Has Unfinished Business.
Posted on June 22, 2009
Article 5, §7. After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired. (New. Adopted by Constitutional Convention of 1938 and approved by vote of the people November 8, 1938.)
What is a pension Tier?
New York City and New York State maintain a variety of pension systems for public employees, wholly independent of each other. All public school teachers outside of New York City are members of the New York State Teachers Retirement System, public school teachers in New York City belong to the New York City Teachers Retirement System, usually referred to as the TRS. Prior to 1970 the NYC teacher retirement plan was called, “Clancy 1%” … teachers had to work till age 65 … pension plus social security plus savings provided a barely adequate pension.
After teachers strikes in 1967 and 1968, and a bruising battle over the decentralization law a reviled mayor negotiated Tier 1 … a 25/55 (years/age) pension plan. Politics makes strange bedfellows (and strange bedfellows make for funny politics … but that’s a topic for another blog). Lindsay wanted to run for president and didn’t want the UFT, with many retirees in a key state, Florida, campaigning against him: the result was Tier 1.
As Dave Wittes, the “father” of Tier 1 walked out of the signing ceremony in Governor Rockefeller’s office he leaned over and whispered to my wife, “They have no idea …this is going to cost them a fortune.”
The NYS Constitution does not allow for pension benefits to be “diminished or impaired.”
Note: it didn’t cost those who fled the city for the suburbs in the 1970s, or retired to Florida, anything. They left the city in ruins.
The legislature realized the fiscal impact, and the residue of the 68 strike resulted in upper West Side Assemblyman Jerome Kretchmer (current restaurateur) leading the charge to create Tier 2 in 1973 and Tier 3 in 1975. Tier 3 was a 30/62 plan, allowing for an age 55 retirement with a social security offset.
Note: this only affected new hires. The schools were starved for years to pay for Tier I, and the children lost unless their parents fled to the suburbs. Pensions were not the only cause of NYC’s 1970s fiscal problems, as debts and economic decline also played a role. Most city services have never fully recovered.
The passage of Tier 3 motivated the UFT to get involved politically, the union created the Committee on Political Education (COPE), the lobbying arm that collects voluntary contributions from members.
The first major positive result was Tier 4 in 1984 that created a 30/55 plan without the social security offset and included paraprofessionals in the plan.
Another change was the 3% contribution was terminated after ten years of service, and, last year, in a major gain, after decades of attempts, 25/55 was restored.
Pension benefits are not mandatory subjects of negotiations, however there is no prohibition. If pension benefits are negotiated they require a home rule message from the governing authority, the approval by a mutually agreed upon actuary and action by the legislature/governor.
Attacks on public employee pension benefits are increasing, see here and here. The Empire State think tanks calls for replacing the current “defined benefits” plan with a “defined contributions” plan … explaination in detail here.
This year Governor Patterson called for the creation of Tier 5, a pension tier with lesser benefits for new employees, usually referred to as “newbies.”
As part of the Tier V deal he cut with the unions, which only affected public employees outside New York City, the legislation made the law that forced “newbies” to pay dues to those unions permanent. It had previously required occasional reauthoriztion. This is yet another round in the “Screw the newbie, flee to Florida” cycle that somehow leaves New York with both sky high labor costs and low paid, unmotivated resentful public employees – who are forced to pay union dues the unions use to prop up incumbent politicians.
The Executive Budget creates a new tier of pension benefits (Tier V) for state and local employees. Many of the requirements for Tier V would simply remove pension enhancements added in recent years to Tier IV, including restoring the minimum retirement age to 62 instead of 55, requiring employees to contribute to the pension fund after their tenth year of service, restoring the minimum years of service required to draw a pension from five to ten, and others. New requirements for Tier V include excluding overtime compensation when calculating pension benefits, which will prevent “salary spiking” in an employee’s final years of service. Under the state constitution, Tier V requirements can only apply to new employees.
Facing layoffs in the thousands two unions representing 120,000 employees agreed to a new pension tier in exchange for a two year “no layoff” agreement.
The UFT and their parent organization, New York State United Teachers (NYSUT) have opposed the creation of a new pension tier.
The pundits have speculate that the UFT might agree to a Tier 5 in exchange for a favorable contract; the current contract ends October 31, however, under the Triborough Doctrine the existing agreement remain in full force.
Speculation abounds that she will agree with Mayor Michael Bloomberg, with whom she has frequently been allied, despite what you may gather from some press reports, to allow a cheaper pension tier, or Tier 5, for future union members in the Department of Education.
Does the union position on mayoral control presage agreement on a contract? or, just wishful thinking?
The NY Post muses that Randi Weingraten, UFT President will finish negotiating the next contract before she leaves the UFT,
After she steps down, Weingarten will continue as head of the 1.4 million-member AFT, but not before finishing city business, sources said. This includes negotiating a new teachers contract — which expires in October. “She doesn’t like to leave thing undone,” said one source. “Whatever she thinks she needs to do before she leaves, she’ll get done.”
If a contract is not agreed to before Election Day, can we expect a major confrontation over core union values?
If the parties cannot reach an agreement the Public Employee Relation Board (PERB) enters the negotiating process … from mediation to impasse to fact finding … easily a six to twelve month process.
Two of the key elements in negotiations over dollar issues are “pattern bargaining,” and “ability to pay.” Other unions have received two year (4% + 4%) contracts with no give backs, however, the eroding fiscal landscape may have extinguished the pattern.
In a full fledged fact finding the City would ask the arbitrators to muse on:
* should teachers in ATR pool be laid off if they cannot find a job within a reasonable period of time?
* should “merit,” however we define it, play a role in salary increases?
* should student performance play a role in teacher evaluation/tenure?
Weingarten may be moving on to the national union, she has a major piece of unfinished business.
UPDATED: (6/23) UFT negotiates changes in pension benefits for new employees.
New UFT-represented employees in titles where employees have been required to report to begin work on the Thursday before Labor Day will report back to work the Tuesday after Labor Day.
New UFT-represented employees will enjoy the 55/27 retirement benefit, which remains intact.
New UFT-represented employees will continue to have the same pension benefits as current members, but they will make additional contributions for these benefits. Breaking it down, under the 55/27 retirement plan, new employees will make a 4.85 percent pension contribution for 27 years and 1.85 percent thereafter, up from the current 4.85 percent contribution for 10 years and then 1.85 percent through 27 years.
New UFT-represented employees will become vested in the pension plan after 10 years of service, rather than the current five. The impact of this change is modest since most UFT-represented educators can elect to withdraw their pension contributions as a lump-sum payment if they quit during their first 10 years on the job.
New UFT-represented employees will be eligible for retiree health insurance coverage after 15 years instead of 10 years. That change will reward educators who choose to make teaching a career.
New UFT-represented employees will receive the 7% guaranteed annualized rate of return for the fixed investment option in the voluntary Tax-Deferred Annuity (TDA) programs for BERS and TRS members.
This is yet another example of the “screw the newbie, flee to Florida” cycle. An additional pension tier, Tier VI, was added later. It will required even higher pension contributions, and an even later retirement age than those who benefitted from the 2008 deal were promised to begin with. The union-backed Fiscal Policy Institute estimates that as a result the pension benefits of newly hired workers are worth only half as much as those eventually handed out to Tier IV workers.
Although given the potential for additional retroactive pension increases there is no way to be sure what pension benefits future or even current retirees will eventually get. Funny, but the union-based Fiscal Policy Institute had never done an analysis of the cost of all those pension increases. And union-backed actuaries and politicians had announced that those increases cost nothing and saved money.
Meanwhile, back in 2008, the pension deal had to be approved by the New York State legislature. To get the Republican State Senate to approve the deal, the United Federation of Teachers provided political support in to the Republican candidate in a special election. A now defunct newspaper wrote about it. No one else did. They wrote about horse racing instead, while this irrevocable burden of future $billions was slipped under the door.
Teachers Get Big Gift From GOP
By JACOB GERSHMAN, Staff Reporter of the Sun | February 15, 2008
Two weeks after the state’s largest teachers union gave Senate Republicans a boost by endorsing their candidate in a critical special election race, Republican lawmakers fast-tracked a bill that would allow New York City teachers to retire with full benefits five years sooner than they can now.
The changes to the pension plan agreed to by the Legislature were a high priority for New York State United Teachers, the 585,000-member statewide labor organization that includes the United Federation of Teachers, which represents city educators.
In October, the Bloomberg administration consented to the pension sweetener in exchange for the adoption of a school-wide merit pay system linked to student test scores.
Albany, however, had final say concerning the approval of the retirement plan. After the mayor’s deal was struck, some members of the union expressed concern that the state Legislature would not immediately follow suit.
The Senate quietly passed the measure on Wednesday. It did not get much public attention, because that same day lawmakers announced with much fanfare an agreement with the New York Racing Association.
The Democrat-led Assembly, which had already passed the early retirement bill last year, voted for it again on Monday. Governor Spitzer is expected to sign the legislation.
Lawmakers and Albany observers interviewed said the timing of the Senate vote was an unusual departure from historical practice. Normally, the Legislature waits until the end of its session in June to deliver to the governor various pieces of legislation expanding pension benefits.
“Is the timing suspicious? Yeah, a little,” a fiscal analyst with the Manhattan Institute, E.J. McMahon, said. “Giving it to them early is a big favor to them. This is usually not done early in the session.” On January 28, the state teachers union announced it was endorsing Republican Assemblyman Will Barclay’s bid for an open Senate seat that will be decided in a special election on February 27. The race is viewed as a must-win for Majority Leader Joseph Bruno’s conference, which holds a fragile 32- to 29-seat advantage over the Senate Democrats.
Although the North Country district is predominantly Republican, Mr. Barclay is facing surprisingly heated competition from his Democratic challenger, Assemblyman Darrel Aubertine.
Union officials said they would set up a phone bank operation to call the 10,000 members in the district and urge them to vote for Mr. Barclay and would also mail endorsement pamphlets. The union said it favored the Republican because he had “demonstrated a commitment to public education.” Labor officials also said they objected to Mr. Aubertine’s support for school-choice measures, such as tax credits for private school families.
The bill passed by the Legislature on Wednesday would allow city teachers hired after 1973 to retire with full benefits at age 55 if they have accumulated at least 25 years of service. Under the current arrangement, teachers must log 30 years to earn a full pension, which is not subject to state or local taxes.
For years, the teachers union has lobbied aggressively for the pension change, which they viewed as especially crucial for its female members who took time off from work to raise children. Under the legislation, teachers who opt into the plan are required to pay 4.85% of salary for their first 10 years of work and 1.85% for the next 15 years.
New teachers would have to work 27 years to qualify. The current plan requires teachers to contribute 3% of their salary for their first decade and then nothing afterward.
It’s not clear what the ultimate cost of the early retirement provision would be for city taxpayers.
In announcing the agreement with the UFT, the Bloomberg administration said the costs of the benefits for early retirees would be balanced out by savings from the increased contributions and the replacement of more expensive senior teachers with a younger workforce.
The bill language, however, indicates that the city would incur an immediate $100 million cost in the first year the plan is made available, largely due to the retirement of senior teachers who are now eligible for full benefits. The language suggests the city would recoup the money in subsequent years.
In recent years, public pension costs have soared in New York, putting an increased strain on the city budget. From 2000 to 2005, tax-funded contributions to public pensions in the state increased to $6.7 billion from $1 billion, according to report by the Manhattan Institute’s Empire Center for New York State Policy in Albany.
A spokesman for the Senate Republicans was not immediately available for comment yesterday evening. Another Republican senator declined to comment.
Note the mention of the lack of press coverage. Here was the hugely significant deal, one that would alter the financial future of the New York City schools irrevocably, and it was virtually uncommented upon. As it is to this day. It is almost under Omerta, because everyone was in on it… Bloomberg, the state legislature, the unions, and the Governor.
Mayor Bloomberg and the United Federation of Teachers claimed the pension increase would cost nothing. But apparently the state legislature forced the city to put an extra $100 million per year into the teacher pension fund for a few years as part of the deal. But Census Bureau data shows that from 2008 to 2010, in the wake of this deal, payouts by the NYC teacher pension fund soared by $1.1 BILLION per year even after adjustment for inflation. And payouts will be $1.1 billion higher indefinitely.
Where is the money going to come to cover the extra payouts of $1.1 billion per year? From past pension contributions and investment returns? No! Because this extra benefit was not promised, it was not pre-funded. And because there was no money in the pension fund to pay for it, there are no investment returns on that non-existent money. In reality this pension increase actually cost (at a minimum, because more of those who benefit require all the time and the additional cost of retiree health insurance), $1.1 billion per year into the indefinite future. Over and above the additional cost of all the other retroactive pension increases that were not pre-funded.
Governor Spitzer, elected with the support of the teacher’s union, signs the bill. A few weeks later he leaves office after a scandal with a prostitute, but this was a far worse example of screwing the young.
February 17, 2008
For City’s Schoolteachers, Retirement May Be Closer
Gov. Eliot Spitzer is poised to approve a deal that would sweeten retirement incentives for New York City teachers, a move that their union and Mayor Michael R. Bloomberg support but that budget watchdog groups say is financially risky.
Because Mr. Bloomberg has agreed to the measure, which would allow teachers to retire five years earlier than they can now and still receive full pension benefits, Mr. Spitzer is likely to sign it, according to an administration official who did not want to be identified because no final determination had been made.
The Spitzer administration is still vetting the plan to make certain that it does not contain any significant unknown costs for the state, which is facing a budget deficit of at least $4.4 billion.
The pension plan — part of the merit-pay agreement reached in October by the Bloomberg administration and the teachers’ union — moved through the Legislature last week at an unusually fast pace for a proposal so significant and costly. The Assembly passed it on Monday, 134 to 8. Two days later, the Senate approved it 54 to 0.
Note: the state was facing a deficit because the echo stock market bubble was already starting to unravel. Spitzer was only concerned about how the retroactive pension increase would affect the state, and thus his own career. The children and people of New York City? Not his problem. Not any of their problems.
Under state law, the Legislature and the governor must approve changes to pension plans for New York City public school teachers. The pension plan would cost the city $99.2 million a year, according to a legislative analysis. But Mr. Bloomberg has characterized the plan as “cost neutral,” in part because the highly paid teachers who would be eligible to retire would be replaced by teachers who would earn far less.
But budget watchdog groups have called the plan irresponsible. “You can’t have a more generous pension system and not have it cost more money,” said Charles Brecher, research director for the Citizens Budget Commission, a nonpartisan group. “It’s taking a pension system that is already pretty generous and making it even more generous.”
The same commenter had earlier praised the same deal. That is what passes for journalism. Get a press release. Get an off the cuff quote from one of the usual suspects, who is willing to provide them even if they have no idea what they are talking about. Perhaps the aura of Bloomberg’s financial acumen snowed Mr. Breecher’s outlook until he had time to read the fine print.
Most teachers now need 30 years of service to retire with full pension benefits at age 55. But under the new agreement, they would be able to retire at 55 with their full pensions as long as they had worked for 25 years.
The pension pact was part of an accord the Bloomberg administration reached with the teachers’ union last fall to implement a plan to award bonuses to teachers based largely on test scores of students at schools with high concentrations of poor children.
The United Federation of Teachers (on its blog) celebrates, speaking first of the pension deal and only later of the “merit pay” component trumpeted by the Mayor and the press. Note the discussion in the comments. Read the whole thing.
Deal with city.
Landmark Agreement For Pension Benefits And School-Wide Bonuses Bring Professional Gains To NYC Public School Educators
At 12 Noon today, the UFT, New York City and the NYC Department of Education agreed on mechanisms to implement two of the outstanding provisions of the 2005 collective bargaining agreement. The agreements create positive, pro-active programs that address two major issues which face our schools: attracting and retaining quality educators in our schools, and creating collaborative learning environments where teachers have real voice.
First, current New York City educators who have 25 years or more of service will be able to retire at age 55 without a reduction in benefits. Second, a voluntary school wide bonus program will be established on a pilot basis in a number of New York City’s highest need schools. Finally, building on the victory of making ‘per session’ pay pensionable, this agreement makes coverage pay pensionable.
PENSION IMPROVEMENTS Currently, NYC public school educators on Tiers II, III and IV who retire before age 62 with fewer than 30 years of service can’t retire without a monetary penalty. This now changes. Subject to legislative passage and the governor’s signature, these educators will be able to retire at 55 with their full pension once they have completed 25 years of service, as Tier I educators are now able to do. (Since pensions can not be bargained, this agreement pledges NYC, the DOE and the UFT to jointly support state legislation to accomplish these changes.) Eligible educators will receive a pension equal to at least one-half of their final average salary, which is generally the last three years of service.
Under the legislation agreed to by the parties, current NYC public school educators will have six months to decide whether or not to opt in to the new enhanced pension program, at a cost of a 1.85% of salary. Future hires will be required to pay 1.85% for their improved benefit. For future hires, the pension will be improved to an eligibility at age 55 with 27 years of service. [No union has negotiated a lower member cost for this kind of benefit, which by terms of the contract, was to be cost neutral for New York City. Tier I members pay at least 5% of their salary for the first twenty years of service.]
The NYC Department of Education and the Teachers’ Retirement System have also agreed that money educators earn for teaching the classes of absent colleagues [coverages] will now count as part of their average salaries for the purpose of calculating pensions. Educators who retired as far back as 1993 will have their pensions recalculated to include this coverage pay, and will receive retroactive payments for up to six years [from 2001 forward] on that basis.
Once 55-25 is adopted by the state legislature, these pension improvements will be a huge step forward in the decades-long fight of the UFT to achieve equity among the different pension tiers. This agreement will provide an important tool to address the retention crisis in NYC public education, providing younger educators with an incentive to make teaching a life career.
SCHOOL-WIDE BONUS PLAN The school wide bonus plan reflects the core belief and principle of the UFT: students achieve when all the educators in a school work together on their behalf. When we foster teamwork and partnership, when educators learn from each other and share their successful educational practices and strategies, the whole school moves forward and students benefit. Unlike individual merit pay plans, which set teacher against teacher in cut-throat competition, school wide bonuses encourage educators to work together and help each other improve instruction for all students.
With the adoption of this school wide bonus plan, we have transformed a negative into a positive, and “shut the door” on individual merit pay programs. New York City is sending a clear message to the members of Congress considering the reauthorization of No Child Left Behind: the way to improve schools does not lie down the road of setting teacher against teacher, but of bringing teachers together in common cause and effort on behalf of their students.
For the first time under the current Department of Education administration, a program is being established that treats our members as educational professionals, recognizing them as full and equal partners of the school principal in the educational enterprise. This is an important advance in the UFT’s quest to achieve full professional status for the men and women who educate our young people.
With this agreement, a pilot program as envisioned in Article 8L of our contract will award bonuses to the entire UFT represented staff in participating schools that meet benchmarks for gains in student achievement. In 2007-08, the plan will be offered to approximately 200 of the highest needs schools, and in 2008-09, the offer will be extended to other high needs schools, with the total number being at least 30% of all schools.
Participation in the plan will be voluntary. Each school’s participation will be decided by an annual vote of 55% of the UFT Chapter and the agreement of the principal.
Schools that meet the benchmarks will receive a pool of money, calculated on the basis of $3000 for every UFT member in the school. A four member team of two administrators and two UFT members elected by their colleagues will decide how to divide the pool among the UFT represented staff in the school. If the distribution plan of the team is not ratified by the UFT chapter, appeals may be made to an Oversight Committee of the NYC DOE Chancellor and the UFT President.
This plan empowers school-based educators, placing in their hands the choice to opt in or out of the bonuses and the decision of how to distribute the bonus money. It also creates a positive incentive for experienced, accomplished educators to work in high needs schools.
Since 1999, principals have received bonuses for gains in student achievement; this plan will extend that opportunity to UFT members in the schools.
This is not the first school wide bonus plan in NYC public schools. In 1998, the UFT entered into the Breakthrough for Learning school wide bonus program in District 19; District 23 was later added to the program. Unlike Breakthrough for Learning, however, this school wide bonus plan is focused on partnership and teacher professionalism.
With these programs, the UFT has addressed two of the major issues from the 2005 contract. We will now continue to tackle class size, school safety, ATRs, and teachers who are in ‘rubber rooms.’ For now, our members will now have additional tools and supports from our collective bargaining agreement to take on the challenges of educating all of New York City’s 1.1 million public school students.
bluedaisy · Oct 17, 2007 at 9:43 pm
Yay for 55/25! I think this is great!
art-teacher · Oct 18, 2007 at 8:20 am
I love the idea of a 55/25 retirement, especially being 44 with 15 years of service. The 1.85% is just below our most recent raise so it’s a NO-BRAINER. BUT my BIG question is, will be have to BUY BACK the 1.85% added pension contribution (the first 10 years of service and the number of years we didn’t have to pay up until the law is changed) I am a little concerned about the bonus allocation, especially being an art teacher, but let’s cross that bridge when we get to it. The adding of coverages to pension is great too, well over due.
Civil Servant · Oct 18, 2007 at 9:49 am This is great publicity for the Mayor and Randi as they pursue further career goals !!! What if no school opts in for the bonus program !! It does appear to be voluntary. Is there a hidden message in having this Bonus only on a voluntary basis ?? Gereat retirement news for those looking to leave early, aka 55 or upon 25 years completion. Sure seems there will be a great drain of quality teachers at ages 47 nd up !!! I thought the 55/25 plan was to maintain quality teachers, not give them an incentive to leave earlier. A little cynical perhaps, but where are the children’s interests !! I say, smaller class size !!!!
Leo Casey · Oct 18, 2007 at 10:52 am The opt in to 55-25 is from here forward. There is no requirement to do the 1.85% retroactively. You only start paying once the opt in period ends. The UFT Pension Department is already preparing a whole series of outreach efforts — meetings in the different boros, literature, additional pension consultations, etc. — to make sure that everyone receives the information they need to make an informed choice. We deliberately created a 6 month window for opt-ins to make sure that we could get to everyone.
Under the 1995 retroactive pension deal, all civilian city workers had been allowed to retire at age 57 instead of age 62 in exchange for a small increase in their contribution. But that increase in their contribution was for their entire career, meaning they had to “buy back” the higher contribution for all the years they had previously worked.
As my analysis of long term pension data from the U.S. Census Bureau showed, this caused employee pension contributions to temporarily rise while discouraging early retirement. The employees basically had to come up with a whole lotta money.
In the 2008 UFT pension deal, in contrast, teachers newly eligible could walk out the door without paying an extra dime. Others only had to pay for a few years. Teacher contributions to their own pension fund stayed rock bottom even as payouts by that fund soared.
The pension deal was signed in March 2008, just as the Great Recession was getting underway. Here is another celebration by the UFT on its blog. Read the whole thing, but note the text in italics.
Passed by legislature, signed by Spitzer.
The Lessons Of 55-25 [Restored]
[A computer in Ohio swallowed the end of the original post. I have rewritten that part.]
In the late 1970s, at the height of New York City fiscal crisis and before many of today’s teachers were born, the law governing the pensions of New York City public school educators was changed for the worse. New tiers with diminished benefits were created, and new teachers had to teach for thirty years or until age 62 before they could retire without a reduction penalty in their pensions.
This last week the UFT achieved the high point of a decades long struggle to bring equity to the pension tiers with legislation that restored the pre-1975 benefit — the right to retire at age 55 with 25 or more years of service — to all educators in service.
What is all the more remarkable is that this enhancement of our pensions came in the face of a wave of coroporate attacks and diminishments of the pension benefits of American working people, and overcame the last minutes efforts of corporate lobbies in Albany to stall the legislation.
There are lessons to be learned here about the importance of building and wisely using the power of union solidarity — and in sheer, dogged persistence.
For the better part of three decades, the UFT fought to bring equity to the different pension tiers and to restore the Tier 1 pension benefits — especially 55-25 — to all New York City public school educators. On two previous occasions, we were successful in passing legislation through the NY State Assembly and State Senate, only to face a gubernatorial veto. Each time we suffered a setback, we renewed the battle. Now, at a moment when few would have predicted it and against the larger trends in American society, we have been successful.
Our success shows the importance of the savvy use of collective bargaining, starting with the inclusion of 55-25 in the 2005 contract and concluding with a contract implementation agreement last fall which made the implementation of school-wide bonuses contingent upon the passage of 55-25 legislation. As a consequence, when the corporate and business lobbyists launched efforts to thwart 55-25 in the days leading up the governor’s signature, the city was actively supporting its adoption.
Equally important was the judicious use of the influence and power acquired through the UFT’s political action arm, the Committee of Political Education [COPE]. Financed totally by voluntary contributions from UFT members, COPE makes possible and supports our work in the electoral sphere. It was that work, and the friends it has won us, that ensured the political muscle necessary to pass 55-25.
Together, all of these levers of power, painstakingly built through union solidarity, brought victory.
Note the comment on the “larger trends in American society.” The UFT is well aware that its retirees are becoming richer and richer, paid for by a general public that is becoming poorer. When its members are retirees go shopping, they are free to squeeze down what other workers get paid by seeking the best deal possible. Those other workers have no choice but to pay for all the retroactive pension increases.
As for the “corporate lobbyists,” it isn’t the corporations that have been sacrificed to pay for the Tier I retroactive pension enhancements in the late 1960s and all the retroactive pension deals since 1991, culminating (thus far) with this one. It is 50 years of New York City children, taxpayers, beneficiaries of other public services, and for the moment younger and future teachers.
The fruits of victory. In the initial screwover of new teachers and children, the number of days worked for all teachers is reduced in exchange for lower take home pay for new teachers. Of course, if the stock market and/or housing bubble had continued to inflate indefinitely, these changes due to “circumstances beyond our control” would not have been necessary. Heads I win and you lose, tails I win and you are crushed to death. There was actually no chance of heads.
UFT and City Reach Agreement On Pension, Ending Two Days Before Labor Day
The UFT and New York City have reached a tentative agreement that will secure pension benefits and end the two days of work before Labor Day, while providing needed savings to the City. The actual agreement, which will be submitted to the Delegate Assembly for its approval, can be read here.
Under this agreement, the pension and health benefits of all UFT members — in service and retiree — remain completely intact. In particular, the agreement preserves the hard-won age 55 retirement pension. After completing ten years of service, future members will pay an additional contribution for these benefits. Effective September 2009, UFT members will no longer have to work the two days before the Labor Day weekend.
“This agreement is a win for everyone,” said UFT President Randi Weingarten. “We are all very concerned about the heavy losses our pension system has incurred during this economic crisis and the looming cuts for schools. No only does this deal help shore up the city budget with new savings, which will hopefully be used for schools, it also maintains the age 55 retirement benefit that we fought many years to achieve and returns us to the tradition of teachers and students starting school after Labor Day, something that our members, particularly those with families, very much wanted.”
The Context As a result of the worst economic crisis in the United States since the Great Depression, public services – including public education – have been subjected to draconian budget cuts, public sector workers have been laid-off and public sector unions have come under pressure to diminish the salaries, health benefits and pension benefits of their members.
From the start of this economic crisis, the UFT has identified two primary objectives which have guided our response to this crisis: protecting the quality of the educational services provided to New York City public school children and securing the economic livelihood and professional status of our members.
I find the propaganda in the above paragraph particularly offensive. The top priority was to take a retirement plan that was already among the most generous for U.S. workers and get even more years in retirement – one year for each year worked. The description of its cost was fraudulent. The cost will be met to reducing the quality of educational services and reducing the economic livelihood of future teachers in one of the highest state and local tax burden jurisdictions in the U.S.
The UFT has rightly rejected efforts to raise the retirement age of New York City public school educators and otherwise reduce their pension benefits – efforts that have grown in intensity since two large state public employee unions earlier this month negotiated agreements which included such measures.
The Agreement Here are the details of the agreement:
Pension and health benefits for all UFT members — in service, retiree and future — remain intact.
All UFT members who have been required to report to begin work on the Thursday before Labor Day will report back to work the Tuesday after Labor Day, effective September 2009.
The 55/25 and 55/27 early retirement benefits are preserved.
All UFT members will continue to receive the 7% guaranteed annualized rate of return for the fixed investment option in the voluntary Tax-Deferred Annuity (TDA) programs for BERS and TRS members. The additional 1.25% rate above the state-guaranteed 7% will no longer be available, a modification that reflects the downturn in investment income after the stock market collapse last year.
New UFT-represented employees will continue to have the same pension benefits as current members, but they will make additional contributions for these benefits — a return to the old Tier Four contribution rules. Breaking it down, under the 55/27 retirement plan, new employees will make a 4.85% pension contribution for 27 years and 1.85% thereafter, up from the current 4.85% contribution for 10 years and then 1.85% through 27 years.
New UFT-represented employees will become vested in the pension plan after 10 years of service, rather than the current five. The impact of this change is modest since most UFT-represented educators can elect to withdraw their pension contributions as a lump-sum payment if they quit during their first 10 years on the job.
New UFT-represented employees will be eligible for retiree health insurance coverage after 15 years instead of 10 years.
When soaring pension costs start to gut the schools even as school spending continues to rise (thanks to a property tax increase, the stimulus package, and cuts in other public services), the UFT has a solution – allow teachers to retire even earlier than 55. Because that “saves money.” Of course one of the reasons the teacher pension system is broke is that it was depleted by past retirement “incentives.”
The president of the city teachers union is asking the city to offer a retirement incentive for veteran teachers, a move that could make room for new teachers who have otherwise been (mostly) frozen out of the system for this fall.
In a letter sent yesterday to Christopher Cerf, the Department of Education’s top human-resources official, Randi Weingarten says she is concerned about how the hiring freeze is being implemented. New schools have been told they are exempt from the freeze, and graduates of education schools are getting cut loose, while members of Teach For America and the Teaching Fellows program are being promised some spots.
Weingarten argues that new teachers, especially those who have graduated from schools of education, could improve the city’s teaching quality:
Remember the teachers who we recruit through the education colleges and the career ladder program have far better retention rates; that both increases teacher quality and saves the money invested in them.
Her solution is retirement incentives for veteran teachers, which she argues would make more room for new teachers. An added benefit, she says, is that those new teachers would cost the city less on average.
Weingarten’s full letter is after the jump. We’ll publish the city’s response as soon as we have it.
May 13, 2009
Mr. Chris Cerf Deputy Chancellor of Organizational Strategies, Human Capital and External Affairs Department of Education 52 Chambers Street New York, NY 10007
During this tough fiscal climate, we have frequently suggested alternatives to layoffs, and we are gratified that the Department of Education has implemented some of those ideas, including a teacher hiring freeze and the filling of school vacancies with educators from the ATR pool who lost their jobs through no fault of their own and are now working in the Absent Teacher Reserve pool. Given the current economic crisis, it is crucial that every dollar be spent wisely. Putting these skilled educators back in the classroom is fiscally responsible and will enable students to benefit from their talent and years of experience.
We have, however, reservations about how the DOE intends to conduct its limited outside hiring for new schools and for high-need areas such as bilingual special education and speech teachers where no qualified ATRs exist to fill vacancies. We are troubled that the DOE has decided to hire candidates from the Teach for America and Teaching Fellows programs while shutting the door on graduates from area schools of education. We believe that the DOE should not give special preference to one group over another. By giving a blanket “no thanks” to all education school grads, we risk losing some of the best teaching candidates to the suburbs, which would undercut the tremendous progress that New York City has made in improving teacher quality over the past decade. Remember the teachers who we recruit through the education colleges and the career ladder program have far better retention rates; that both increases teacher quality and saves the money invested in them. Further, if there is a hiring freeze, all schools should be subject to it; new ones should not be exempt.
While the hiring freeze is a good temporary first step, we ask you to review the other money-saving proposals that we first presented to you on Dec. 31, 2008. These proposals could help the DOE save millions of dollars and run a more cost-effective operation while having minimal impact on classrooms. Foremost among them, we ask you to reconsider offering a retirement incentive for veteran teachers. Not only would a retirement incentive save the school system money (by replacing higher paid veterans with new hires), but it might allow for a partial lifting of the hiring freeze, which would give the next generation of great teachers a chance to begin their careers in New York City public schools.
We hope that you will pay serious attention to our ideas and concerns. We look forward to working together with you as we navigate through these difficult economic times. We hope to hear from you soon.
Sincerely, Randi Weingarten, President United Federation of Teachers
The Bogus “Merit Pay” Plan, Allegedly the main point of the deal that also drastically enriched pensions, later disappears. The press doesn’t mention the pensions and their cost. In fact, it has generally never mentioned the 2008 pension deal again even as its consequences continue to affect the schools.
City ends performance bonuses for teachers and staff because test scores plummeted
BY Rachel Monahan DAILY NEWS STAFF WRITER
Originally Published:Friday, January 21st 2011, 4:00 AM Updated: Friday, January 21st 2011, 3:19 PM
Education bonuses have shrunk drastically this year, partly because of dramatically lower test scores.
The city has ended its signature reform effort to award teachers and staff with performance bonuses – 16 months after the teachers union first called for putting the money toward students.
“In this economic environment, all money needs to be focused on the classroom,” said teachers union president Michael Mulgrew Friday.
A city Education Department spokeswoman said in an email Thursday evening that a decision on continuing the program would be made after a research report was completed in the spring – but in an email to principals sent nine minutes later, agency officials announced they would “suspend” the program.
For three years, the bonuses were awarded to staff for improvements on the city’s controversial progress reports.
Roughly 200 schools serving at-risk kids elected to enroll in the program to earn an average $3,000 a staff member.
The program faced criticisms last school year when bonuses were given to schools the city was trying to close for poor performance.
Brooklyn’s William H. Maxwell High School was awarded the bonus again this year. It was one of just 26 schools to receive the bonus – down from 162 last year.
“I can’t tell you how much we deserve this,” said teacher and union chapter leader Jeffrey Bernstein, at Maxwell, which the city is no longer trying to close.
In 2009, the bonus program paid out $30.6 million after test scores skyrocketed on the state exam.
The state later admitted the tests had become easier to pass, meaning the city wasted millions in tax payer funds for bonuses based on the inflated test scores.
By YOAV GONEN
Last Updated: 9:00 AM, January 21, 2011
Posted: 3:02 AM, January 21, 2011
Only 13 percent of schools that participated in a teacher-bonus program last year met their targets after test scores bombed across the board, education officials said as they announced the program has been suspended.
The $4.2 million payout to educators — based on whether their schools met student-performance targets on state math and reading tests or graduation rates — was by far the smallest amount awarded during a three-year pilot program.
It was set up to evaluate whether cash incentives for teachers in high-needs schools can boost student performance.
January 20, 2011
Pilot Program of Teacher Bonuses Is Suspended
New York City’s Education Department said Thursday that it was suspending one of the signature experiments of Mayor Michael R. Bloomberg’s control of city schools, a multimillion-dollar program that awards annual bonuses to teachers based on student performance.
The announcement came on the same day the city announced that teachers at only 26 schools would receive schoolwide bonuses this year, down from about 160 schools last year, as far fewer schools met their performance targets on state standardized tests.
In an e-mail to principals, the city said the program would be suspended as soon as this year’s bonuses were distributed, but it left open the possibility that it could be restarted if a study showed the bonuses had a positive effect in schools.
“This was always a pilot program, and we don’t yet know its impact on student achievement,” said Barbara Morgan, a department spokeswoman, of the bonuses. “We have commissioned an independent study by the RAND Corporation that is due late this spring, and we will make a determination about whether to continue this program based on the results of that study.”
The city’s tight budget was one of many factors that led to the decision, the city said. Schools absorbed a 4 percent cut to their budgets at the start of this school year, and the mayor’s budget projects that thousands of teacher layoffs may be necessary for the 2011-12 school year.
Note: the total per-student cost of the NYC schools was soaring during this time, but more than 100 percent of the increase was going to soaring pension costs. The reality there was not “cuts” but soaring spending on schools, going exactly where the UFT wanted it to go.
The bonus system was planned as a pilot program several years ago with the support of the teachers’ union, which required that the money be given to schools as a whole, rather than to individual staff members. Only high-poverty schools can qualify, and each year about 200 schools elect to participate.
In the 2007-8 school year, the program’s first year, $21 million was distributed, much of it privately financed. Last year, the first year the program was publicly financed, $31 million was awarded. A total of $4.2 million will be given out for this year’s teacher bonuses. Additional bonuses to principals will be announced in the coming days.
Due in large part to tougher standards on state math and English exams for third through eighth graders, the number of elementary and middle schools awarded bonuses plummeted to 12 this year, from 140 last year. There was also a slight decline in the number of high schools given bonuses.
Under the bonus program, schools receive payouts equal to $1,500 or $3,000 for each full-time unionized staff member, depending on the school’s progress. A committee at the school, made up of the principal, the union chapter leader and two other school staff members, decides how to divide the money among the staff.
Michael Mulgrew, the union president, called for the bonus program to be suspended until the state tests, which state officials have said were too easy to pass, are improved and the city’s budget difficulties ease.
“We should be putting the money toward the classroom right now,” Mr. Mulgrew said. “People are going to do their work with or without the bonuses.”
Remember all that talk of “collaboration?” It went out the window as soon as the UFT got 25/55. The union basically declared war on school reform, and schools in general, practically the day after. It was all a smokescreen. There was only one goal – richer retirements after less years of work. And that is the only goal today. And something tells me the city’s Chancellor of Education, Joel Klein, wasn’t in on the deal. After later being forced to gut the schools to pay for it, he quit.
Klein’s pension critique ignores Bloomberg’s culpability
Joel Klein, writing in this month’s Atlantic on the city school system he ran for nine years, cites “senseless policies” and “perverse incentives” that have led to an unfunded pension liability that some estimate to be $35.9 billion.
Klein notes that the city’s education pension costs have gone to $2.6 billion in 2011 from $455 million in 2002, “robbing today’s children to pay tomorrow’s pensions.” He writes that he once proposed eliminating defined-benefit pensions and using the savings to pay junior teachers more. (The teachers union rejected the proposal.) But he omits that the final deal gave thousands of teachers an incentive to retire five years earlier with a decade of health benefits before Medicare kicked in.
The 2007 deal with the United Federation of Teachers allowed current teachers to retire five years earlier—after 25 years on the job rather than 30. New teachers were allowed to retire after 27 years. The city justified the new deal by saying teachers had to pay more into the system while they worked. But many simply retired instead.
At the time, Room 8 blogger Larry Littlefield said the deal would devastate the system financially, a position the Bloomberg administration appears to be coming around to as it asks Albany to cut city pension costs. Klein blames Albany for siding with the union.
“The mayor repeatedly raised the pension issue throughout his tenure but didn’t get the needed support in Albany,” Klein told the Insider. “Anyway, my point about pensions is that the defined benefit structure is unsustainable, whether someone works until 62 or 55.”
If Klein felt so strongly, he should have resigned in protest when the 2007 deal was done, Littlefield said.
A 2009 deal required future teachers to pay more into the system—4.85% of their salaries for 27 years and 1.85% percent thereafter into the pension system. New employees need to work 15 years to get retiree health benefits and 10 years for pension benefits, up from 10 and five years, respectively. Littlefield said deals like this create “generational inequity,” sweetening pensions for workers moving out of the system while cutting wages and benefits for younger workers. Now the city is in such tight fiscal straits the mayor is threatening to lay off about 4,600 teachers.
Among the guilty parties are the media. Here is a Mea Culpa from the Los Angeles Times on its failure to cover the massive California pension deal of 1999. That was a year before the stock market bubble used to justify it popped. The 2008 deal was eight years after – and pension costs were already soaring as a result of that prior deal. Everybody pulled this stuff in the stock market bubble. In New York it goes on and on, along with repeated rounds of lower pay and benefits for new hires. Note how as in New York, where horse racing was the “big story,” the pension increase was slipped out amidst other more sexy news.
On the Media: How the press missed the pension increase
When California’s legislature voted to expand state employee pension benefits with SB 400 in 1999, the press missed the bill’s significance amid other newsworthy end-of-session legislation.
By James Rainey
December 8, 2010
The introduction to California’s whopping expansion of pension benefits for public employees should have read: “Supersize Me.”
But it’s taken more than a decade for the press to give any extended attention to the story. Only now are taxpayers learning the fortune they might have to pay so government workers can enjoy cushier retirements than the average Joe.
How did the media so badly miss such a gigantic threat to the fiscal stability of the state?
There are many reasons why, beginning with an unpleasant truth: Technical subjects that will play out many years in the future don’t have the sex appeal that grabs most reporters, editors and even readers. It’s not that journalists can’t or won’t be drawn into such stories. They will sometimes tackle them with abandon. But that usually takes an accomplice — an expert, lobbyist, whistleblower or lawmaker to point the way.
In the go-go days of the late 1990s, when some of the most problematic pension expansions won approval, the people who might have un-rung the public retirement dinner bell for the people and the press couldn’t, or wouldn’t, be bothered.
The coverage of SB 400, one of the most critical pieces of legislation expanding public pensions into the unaffordable zone, provides a useful case study.
The bill won approval on the final day of the state legislative session in the fall of 1999. But searching this week for contemporaneous coverage of the law, I found little to nothing.
Reporters straining to keep up with 11th-hour deal-making that Friday in September gave plenty of attention to an agreement that would allow an expansion of Indian gambling operations around California. A lot of attention also went to a couple of bills that cracked down on illegal sweatshops. Another piece of legislation, providing gay students a legal shield against abuse, also made front-page news.
But SB 400 got only a handful of mentions — and terse ones at that — across dozens of papers and other outlets, including the Los Angeles Times. When Gov. Gray Davis signed the bill, it hugely expanded pension benefits for state workers. It set a benchmark that would be followed by dozens of counties and cities.
With the boom-time economy now a distant memory, worst-case scenarios suggest the law and a raft of other profligate legislation could stick California taxpayers with a tab spiraling into the hundreds of billions of dollars. The IOUs aren’t pretty. Neither are the explanations about how the press failed to put the public on notice.
Those who might have pointed the way weren’t offering much help. Actuaries at CalPERS said everything would work out, even if the markets took a dive. State budget analysts, who stood to gain themselves from pension hikes, didn’t make a peep, as far as I can tell now. And lawmakers of both parties, led by the majority Democrats, got too much support from public employee unions to put an end to the banquet.
George Skelton, the Los Angeles Times columnist who has covered Sacramento for decades, said this sort of end-of-session hocus-pocus — with important policy changes obscured by dozens of other pieces of legislation — happens all the time.
Skelton didn’t recall the specifics of the SB 400 case, but the journalistic mind-set he guessed at in an e-mail rings true. “I’m sure one of the media attitudes was: Who are we to say it’s not fiscally prudent, when the retirement board and legislative consultants say it is?”
Still, the press has to demand more in the future and look out for trouble, even when the warnings are few and not popular. The financially beleaguered mainstream press still offers the most boots on the ground and the best hope of digging out the deeper questions of fiscal solvency. But new and still growing nonprofit news sites need to claim the opportunity, and obligation, these stories represent.
CalPERS officials rolled out what they acknowledged in May 1999 was “the biggest benefit increase in the history” of the retirement system. What became SB 400 granted a 50% pension hike to California Highway Patrol officers. It eliminated a two-tier pension system that limited contributions and benefits for many workers. It gave an across-the-board “cost of living” increase of as much as 6% to current and former state workers.
Most important, the law sparked a race among cities and counties to make their benefits competitive. The argument at city halls around the state went: If we don’t hike retirement pay for our cops and firefighters, we are going to lose them to the neighboring jurisdiction.
It’s hard to tell now who first raised objections. I asked CalTax about its position and the group produced a letter to legislators, dated a week before the final vote. It warned that the nation’s longest-ever boom would end, correctly predicting the pension fund “cannot be expected to realize the investment returns of recent years.” Taxpayers would either have to pay more, or weather cuts in support to education, law enforcement and infrastructure.
But that argument didn’t gain much traction, even with conservative lawmakers. The state Senate voted 39-0 for the bill, and the Assembly passed it 70-7.
Then-assemblyman and now U.S. Rep. Tom McClintock (R-Granite Bay) was one of the handful of “no” votes. “A lot of people were bound and determined to vote for it because of public employee union support,” McClintock recalled Tuesday. Elected officials “could get credit from the unions now and the bill wouldn’t come due until after they were gone.”
McClintock recalls a “heated” discussion in the Republican caucus about SB 400. But reporters didn’t have access to that fight.
I couldn’t find a single story chronicling the vote. Indian gambling, rights for gay students and sweatshop reform made front-page news. All offered what even serious news organizations tend to crave — the immediate and visceral.
“If there had been deficit problems,” Skelton said, “it would have been a different story.” No doubt. But the opposition back then got little or no play in the media.
Among the most thorough accounts was a 2002 story by reporter Catherine Saillant of The Times, who happened on the problem when covering Ventura County.
But a bigger push, and reporting, for reform came only this year. The sort of accomplice the press relies on emerged in April, when Stanford graduate students released a report that estimated the state would need an extra $200 billion to $350 billion to fund its pension systems adequately.
State workers and the pension systems have called those figures inflated. But the reality of tougher times has become undeniable. Several state unions agreed with Gov. Arnold Schwarzenegger and contributions for future government workers will be restrained.
Reporters today don’t need anyone to draw a picture to grasp that public employee pensions — some paying retirees 100% of their final working salaries — fall well outside the norm.
Working in an endangered corner of the private sector, many journalists have had their retirements reduced to their 401(k)s and little more. A little envy can’t help but focus the mind of deadline-addled wretches like me.
The Milwaukee Journal Sentinel wins a Pulitzer for an investigation into one aspect of a pension deal that had been uncovered by a blogger years earlier. This is the deal that made new Wisconsin Governor Scott Walker. Note that under this deal the beneficiaries were required to buy back years of extra pension increases. Under the 2008 UFT deal, NYC teachers were not.
Pension investigation earns Pulitzer
Journal Sentinel’s Umhoefer scoured county data for 6 months
Bill Glauber of the Journal Sentinel
April 8, 2008
Pension twist costs county millons: Ignoring county law and federal tax rules, Milwaukee County let employees change history by ‘buying back’ pension time from summer jobs in their youth. A Journal Sentinel investigation prompts the county to confess to the IRS. (July 29, 2007)
Milwaukee Journal Sentinel reporter Dave Umhoefer‘s six-month investigation into the Milwaukee County pension system won journalism’s top award Monday – a Pulitzer Prize.
Umhoefer received the award for local reporting, marking the first time a Pulitzer was won by a staff member of the Milwaukee Journal Sentinel and sixth Pulitzer Prize overall in the newspaper company’s long history. The Milwaukee Journal was awarded five Pulitzers.
Umhoefer’s story detailed pension deals for Milwaukee County workers. During his investigation, he created a database to show how hundreds of county workers boosted their pensions – violating county ordinances and IRS rules in the process.
The lucrative county pension deal allowed select workers to “buy back” service time for seasonal and part-time jobs held decades ago. The program was marked by cronyism, conflicts of interest and backroom deals.
“Did the newsroom need some good news?” Umhoefer shouted when news of the Pulitzer came across The Associated Press wire shortly after 2 p.m. Monday. “I hope everyone feels proud about this and shares in the pride.”
Journal Sentinel Editor Martin Kaiser said the story reflected the newspaper’s commitment to local news, digging deep on important issues and making a difference in the community.
“No one else is going to do investigations like this except newspaper staffs,” Kaiser said. “That is what makes you relevant. You’ve got to provide news that people can’t get anywhere else.”
Publisher Elizabeth Brenner said: “Milwaukee needs to be incredibly proud of this. This is like the Packers in the playoffs, the Brewers with a winning season. We’re a hometown newspaper, and we’ve just distinguished ourselves in the championships of journalism.”
She added, “The Journal Sentinel hasn’t backed off in its commitment to local news. It’s the most important thing we do. We do it better than anyone.”
Umhoefer, 47, is a native of La Crosse. He arrived at The Milwaukee Journal in 1985, two years after graduating from the University of Wisconsin-Madison journalism school. As a reporter, he has covered government, federal courts, politics and public affairs. As an editor at The Milwaukee Journal and later the Journal Sentinel, he supervised investigative projects and Capitol news.
He is now a part of the 10-person Watchdog Team, one of the largest of its kind at any newspaper in the country. The team was formed last year.
For Umhoefer, the pension story was the culmination of his assignment covering Milwaukee County government.
“I was leaving the county beat,” he said. “This was one of those stories on my list that I could never get to because it was so complex.”
Umhoefer spent four months digging plus two months writing this complex story. During that period, he also had surgery to repair a torn retina.
“It’s arcane and the mechanics of calculating a pension payout are dull,” he said. “But the public is extremely interested in the size of pension payouts and whether things are on the up and up.”
To create his database, Umhoefer sifted through thousands of pages of county records. Among the findings:
Hundreds of county employees boosted their pensions by tens and, in some cases, hundreds of thousands of dollars.
A former county executive would not have qualified for a pension but for the buyback provision.
The buybacks would cost the cash-strapped county about $50 million.
Because no one – including the county pension board – had ever tried to analyze this unusual and unique perk before, Umhoefer and his editors hired two independent financial experts to check the newspaper’s analysis.
Umhoefer’s investigation prompted results before a word was published. In response to the reporter’s questioning, county officials turned themselves in to the Internal Revenue Service just days before the story appeared.
The county has since hired two prominent Chicago attorneys, both former federal prosecutors, to investigate.
Meanwhile, the pension board has closed the holes uncovered by the Journal Sentinel and has taken steps to retrieve money that had been given to retirees under the buyback.
The investigation was edited by Mark Katches, assistant managing editor for projects and investigations, and Michael Mulvey, the local government editor.
The Pulitzer Prizes are administered by Columbia University and awarded every April. The Journal Sentinel was a finalist in explanatory reporting in 2003 for a series of stories on chronic wasting disease. The newspaper was a finalist again in the same category three years later for a story about a girl’s remarkable recovery from rabies.
This year, Walt Bogdanich, a 1975 UW-Madison graduate in political science, won his third Pulitzer Prize. Bogdanich and Jake Hooker of The New York Times won in the investigative reporting category. The Chicago Tribune also won in that category.
The Wisconsin State Journal staff was a finalist in the editorial writing category for its campaign against the governor’s so-called Frankenstein veto power. No prize was awarded in that category.
The other finalists in the local reporting category were the Sarasota (Fla.) Herald Tribune and The Record of Bergen County, N.J.
Hey journalists, want a Pultizer? All those involved in the 2008 pension deal are still around, and Giuliani and Pataki could be asked about the 1995 and 2000 deals as well. How about asking some questions? I’ve provided all the available data in the links at the top. E-mails could be FOILED.
Is the press just going to report propaganda with regard to why New Yorkers have to pay so much, and get so little in return? Because that is easy? What could be easier than this? I provide this information gratis – go ahead and use it!
After the 2008 pension deal, I predict the future of the NYC schools, based on the 1970s experience and other factors. Before that deal, whenever I wrote about problems in public policy, I also offered solutions. I haven’t really bothered since. What’s the point? From the point of view of those who benefit from things as there are, there are no problems, just opportunities to take more while providing less and blaming someone else. The question is, how long can they keep shifting most of the cost of that deal, and other deals, forward before the final institutional collapse.
As I have described in as many ways as I can, an inevitably rising share of public spending will be going to debts run up by past generations, rich pension and other retiree benefits for those cashing in and moving out, workers with seniority who are no longer required to work, and those in places like New York’s suburbs and upstate New York who need a “job” to be able to live the way they “deserve.” At the federal level, thoughtful people of all political views understand that the “debt” implied by having younger generations provided with the same health care and Social Security benefits that older generations have handed themselves is so high that it can ever be paid — the financial debts are on top of that. If you live in New York State, the situation is actually much worse, because it is necessary to anticipate future increases in benefits for those with deals on top of those that have already occurred. At the same time, more and more potential tax revenues are lost to special tax deals and breaks, and as a result of similar self-dealing and future-selling in the private and personal sectors, people are about to get a whole lot worse off, reducing tax revenues overall. Actual public services, benefits, and infrastructure will be crushed between these two pincers.
Once this is accepted as inevitable, because the people who benefit from current trends and conditions have unchecked power and no conscience, the question is “what will life in New York City be like twenty years from now.” What will it be like for your children if they stay here? I’ve written about transportation — how they’d better learn to get around by bike and telecommute because the bus system will melt away through a series of budget crises, the subway system will become increasingly unreliable due to disinvestment (with entire lines shut down for years when a critical component fails until the money is scrounged for a temporary fix), driving expensive, parking impossible, and the only other choice illegal but tolerated uninsured private vans operated by drivers of questionable ability. This post is about education — I’ll get to health care later.
I have described the future of public services and benefits as “privatization” and “placardization.” By placardization, I mean that to the extent that public sector has anything worthwhile to offer, it will not be able to afford to offer it universally, and it will be allocated instead to insiders and those with connections by a variety of means. The way scarce parking is allocated to those with the connections to get placards, legal and illegal. By “privatization” I do not mean that the government will provide universal, equal benefits by hiring private contractors rather than public employees, as it does in the Medicare program or under a school voucher program. I mean that those who have the resources to provide what were once public services for themselves will be permitted to do so (as long as they are grateful for that permission), while those who lack such resources will be left to do without. In other words, we’re heading for a pre-Progressive era level of public services and benefits, at a Swedish tax rate (because those who matter have received Swedish-plus benefits while paying Reaganite taxes or less).