Last year, when I went to update the tables I had compiled of U.S. Census Bureau data on public employee pensions over the decades, I found that the City of New York had started misreporting data for the NYC teacher pension fund.
Reporting to the Bureau that the teachers’ own money in their Tax Deferred Annuity (TDA) accounts was actually pension fund money, to make the pension fund deficit seem less disastrous. And not reporting the payments from the actual pension fund to those TDA accounts as pension benefits, to make teacher pensions seem less costly than they actually are. I spoke with the Bureau about this, and they told me that they intended to speak with NYC about it, but no corrections would be made until this year. So I chose not to finish updating the tables and write posts.
This year I downloaded the data, and found the same errors. The Bureau told me it had intended to make a correction, but the incorrect data had “crept back in.” But if I waited until next year at this time, surely the data will be corrected. But instead of waiting another year, I decided to use the Annual Report of the NYC Teachers Retirement System to correct the data myself. The results are in the spreadsheets linked and available for download below.
This post will simply include the spreadsheets with the tables and charts without comment or discussion. In the triumph of hope over experience, I plan to once again provide the information up front so people can look at it and make up their own minds about what they are seeing, prior to reading my analysis of the data. The first spreadsheet includes data on all the pension funds in New York and New Jersey, going back as long as possible.
The data for the largest currently active pension plans has been updated through FY 2016. Many prior plans were mismanaged and ran out of money, costing future taxpayers and public service recipients dearly, including prior pension plans for NYC police officers and firefighters that went bust in the 1960s. In 1967, with NYC lurching into fiscal distress and public services collapsing, city taxpayers spent $64.6 million on long-retired officers who had been part of the defunct NYC Police and Fire Article 1 pension plans. That would be $464.2 million in today’s money. NYC was still paying for those who had been in these plans until at least 1992.
You can find data on the current New York City Police Pension Plan Article II and the New York City Fire Pension Plan Article 1B in the Police and Fire tab of the spreadsheet. Data for the current New Jersey Police and Fire pension plan may be found there as well, along with some larger predecessor plans.
It should be noted that it isn’t just through defunct police and fire pension funds that the cost of retired employees has been shifted to future city residents. At some point I happened to pick up a copy of The Teacher’s Handbook adopted by The Board of Superintendents of the Department of Education of the City of New York on September 20, 1921. Recently I decided to leaf through it. On page 51 it states
“The present Teachers’ Retirement System was established by state law in 1917, displacing the Public School Teachers’ Retirement Fund, which had proved insufficient to meet the demands placed upon it.”
“Under the old law, funds had been derived for the most part, and in about equal amounts, from teachers’ absence deductions, one percent of teachers’ salaries, and five percent of all excise moneys. In time, receipts from these sources were inadequate, and thus further retirements were impossible, until the present law, which is financially sound, was enacted. The Teachers’ Retirement System of the City of New York has become the model throughout the country.”
No wonder so many public employee retirement plans are going bust, with tremendous harm to taxpayers, service recipients, more recently retired public employees, and in some cases retirees. The evidence suggests they never, ever got this right. Pensions provide an opportunity to rob the future and those who will live in it, and that apparently happens almost every time.
“The underlying ideas of the Teachers’ Retirement System are: a) That the teacher and the city assume equal responsibility, actuarially determined, in providing the money which is to secure the retirement benefits; b) That this money is currently placed to the credit of the individual teachers’ account, leaving no doubt as to its availability when retirement allowance becomes due; c) That the teachers, through elected representatives, share in the management of the system by the Board of Retirement.”
We’ll talk about what else what document said in a later post.
Data for police and firefighter pensions for the rest of New York State, part of the New York State retirement system, is reported as part of one large pension plan for everyone except teachers.
The data for that plan, for the New York City Employees Retirement System (which covers most NYC public employees other than police officers, firefighters and teachers), and the New Jersey Public Employees Retirement System, which includes most public employees in New Jersey, may be found under the General Employees tab.
New York City, the rest of New York State (as part of the New York State system), and New Jersey also have separate pension systems for teachers, with data under the Teachers tab.
For FY 2016, New York City reported $64.4 billion in pension plan assets, code Z81, for 33203100110200, the Teachers Retirement System of New York City, to the U.S. Census Bureau. But the actual figure was no more that $43.6 billion, with the rest actually belonging to individual 401K-equivalent TDA accounts of individual teachers. I corrected the numbers for this and prior years, using data from this and prior pension plan documents.
If one looks on page 28, one of those that does not have “unaudited” at the top, one can see that the pension plan “owed” the TDA $28 billion, even though the cash value in of the TDA was $8 billion. The $20 billion owed to the TDA is due to a guaranteed 7.0% return on TDA assets, with any shortfall to be made up out of pension plan assets. Thus the amount the Qualified Pension Plan has available to pay benefits is just $43 billion, not the $64.4 billion reported to the U.S. Census Bureau.
Pension Benefit Payments, code X11, were reported to the Census Bureau as $4 billion. Code X 11 is supposed to be the sum of code Z13, Retirement Benefits, Z14, Disability Benefits, Z15, Survivor Benefits, and Z16, Other Benefits. Other Benefits, according to the Bureau’s classification manual, include “life and disability insurance on behalf of retirees, pre-retirement death benefit premiums, benefits due on termination of employment, and other benefits as allowed.” Such as the guaranteed 7.0% return on the TDA.
In FY 2016 the New York City Teachers Pension Plan paid $1.354 billion to the teachers’ own Tax Deferred Annuity accounts as a result of that guaranteed 7.0% return. Before current Comptroller Scott Stringer was elected with the strong support of the United Federation of Teachers, these payments, which have been soaring, were correctly reported as an “Other Benefits” paid by the New York City Teachers’ Pension Plan. Stringer evidently did not report this payment under any code, despite being called on it last year.
A spreadsheet of the data for the teacher pension plans alone, with adjustment for inflation and a series of charts, is here.
The post I intend to write on teacher pensions will be based on those charts, with additional commentary.
A similar spreadsheet for the three large plans for most public employees in New York and New Jersey is here.
And a spreadsheet with charts for the NYC Police pension plan, the NYC fire pension plan, and the New Jersey police and fire pension plan is here.
What is not corrected in these spreadsheets is the $12,000 extra pension benefit payment most former police officers and many former firefighters receive each year. Like the soaring payments from the NYC teacher pension plan to the TDA account, the city has long reported these payments either as nothing or as money that didn’t go into the pension funds. I still don’t know where it is showing up, but the really low reported rate of return of the police pension fund over the long term in Census Bureau data implies it was deducted from earnings.
So look at the data, look at the charts, and make up your own mind. But don’t forget this. While public employee pension plans are in crisis not only in New York City but all around the country, New York City taxpayers have contributed more to public employee pension plans over the decades, as a percent of public employee payroll, than taxpayers anywhere else, as I showed here.
Resulting in a higher tax burden, diminished services, and unmet needs. And yet at the end of this, NYC has ended up with as much as a pension crisis as less responsible places such as New Jersey. With pension plans that are far more underfunded than the New York State pension plans that cover local government workers in the rest of New York State, even though the same state legislature that sets the rules for the NY State pension plans also does so for the New York City pension plans.