The Chief
April 17, 2009

Unions Rip City Memo Warning of Need

For Up to 7,000 Layoffs

Say Pressure Tactic Won't Make Them Buckle On Health Talks, Tier 5


A Bloomberg administration threat April 8 to lay off up to 7,000 city workers unless their unions agree to health and/or pension benefit concessions was denounced as the work of "amateurs" by a key labor leader.

"As far as I'm concerned, this is the amateurs, dealing with this in this way," said Uniformed Sanitationmen's Association President Harry Nespoli. "To totally turn around and disregard the working person and hang this over their heads, that's bad business."

Most Agencies Cutting 4% More

Mr. Nespoli, who also heads the Municipal Labor Committee, was reacting to a memo issued by city Budget Director Mark Page instructing most city agency heads to cut their budgets by an additional 4 percent, with the Department of Education asked to produce a 1.4-percent reduction and uniformed agencies told to shrink their spending by .5 percent.

Mr. Page's memo stated, "Given the efficiencies you have already achieved, this next step would most likely rely heavily on additional headcount reductions, whether through attrition, or, as is more likely, through layoffs." He estimated that this would result in "a reduction of as many as 7,000 positions citywide, including non-city positions funded or subsidized by the city."

Those cuts, he added, would be in addition to "the headcount reductions of approximately 9,000 positions (including 1,300 layoffs) that were included in January in the Preliminary Budget for FY 2010."

Wide Gap on Labor Savings

The memo earlier noted that the city had been banking on $757 million in labor-related savings, $557 million of it through changes in the municipal health-benefits program that would require employees to pay a share of their health premiums and the rest through a Tier 5 pension system that would downgrade benefit rights for future employees. Neither of those savings has materialized; the MLC, which bargains on health benefits for all city unions, has offered $200 million in savings but mostly through administrative changes rather than employee contributions, and Tier 5 legislation has yet to make any headway in the State Legislature.

Mr. Nespoli contended that the layoff threat was counterproductive to the ongoing negotiations on health benefits. "We did not leave the bargaining table yet," he said in a phone interview. "If we're going to get where we can help the city, this has to stop."

He added, "I never like to see layoffs. The taxpayers are going to be shortchanged, it hurts the people who lose their jobs and it's devastating to morale among the people still on the job who wonder, 'Am I going to be next?' "

DC 37, Local 237 Blast Threat

The civilian-employee union leaders whose members would be hardesthit if the layoffs come to pass also reacted angrily to Mr. Page's memo.

District Council 37 Executive Director Lillian Roberts issued a statement criticizing the Bloomberg administration for not seeking savings by reducing the amount of work it contracts out, adding, "We intend to use every resource at our disposal to fight to protect these city services and the men and women who provide them."

Teamsters Local 237 President Gregory Floyd accused mayoral officials of "holding us hostage over the health benefits. You're creating a panic that really could backfire."

Nor, he contended, would the threat make union leaders more inclined to agree to concessions sought by Mayor Bloomberg. "Not under these circumstances," Mr. Floyd said, explaining, "We could come through with savings and still have layoffs. I think this is a similar tactic to what the Governor is doing," referring to David A. Paterson's letter to state workers informing them that their unions' recalcitrance was forcing him to consider massive layoffs.

'Won't Bend to This Pressure'

"The group of labor leaders I'm working with is not going to respond to this kind of pressure," Mr. Floyd said.

Mr. Nespoli said, "I think it's also meant to put pressure on Albany." The city received somewhat less in state aid than it had been expecting, and the Bloomberg administration over the preceding few days had seemed intent on stoking the fires for the Tier 5 pension plan.

The plan, put forth by Governor Paterson at the Mayor's request, would raise the retirement age for future city employees by at least five years. In the case of cops and firefighters, who can currently retire after 20 years on the job at any age, it would compel them to serve at least 25 years and be at least 50 years old before they could begin collecting a full pension.

After Mr. Skyler told the Citizens Budget Commission April 2 that the traditional city defined-benefit retirement plans were "not only obsolete but unaffordable," the CBC four days later released a report on the city's burgeoning pension costs.

Target Police, Fire Payouts

Most of that report, which was extensively excerpted in the April 7 edition of the New York Post, was a rehash of CBC findings issued earlier this year and focused particular attention on the post-retirement benefits received by cops and firefighters. The business-funded group urged the Bloomberg administration to put an end to what it termed "Christmas bonuses"—the Variable Supplements Fund payments of $12,000 a year that are made each December to police and fire retirees. Those payments, although derived from the stock profits of those employees' pension funds, are not considered pension benefits and therefore are "not protected by the state Constitution," according to the CBC. One element of the Tier 5 proposal would eliminate the VSF right for future cops and firefighters (currently all those who retire on a regular service pension after at least 20 years on the job receive VSF payments).

PBA: Pensions Not Problem

The report drew an angry response from Patrolmen's Benevolent Association President Patrick J. Lynch, who said that police pensions, "which are about average in the law-enforcement profession, are not the problem and reducing them for future officers will not save any money in the near future and will only create a recruiting crisis for the NYPD. The real problem is the loss of revenue due to the collapse of the stock market, and this is a temporary problem . . . As usual, the group of millionaire lawyers, investment bankers and real-estate moguls who run the arm of the Mayor's press office called the Citizens Budget Commission are far off the mark on this issue."

United Federation of Teachers President Randi Weingarten acknowledged that the city has "a real problem" financially, however much the layoff threat was rooted in political gamesmanship. But she also said she believed Mr. Bloomberg should be considering an early retirement program to cut the payroll before resorting to layoffs.

The Mayor is known to oppose such initiatives, believing that many of those who take advantage of retirement incentives would have left government service anyway, and they are not the most-effective way to reduce the workforce. But Ms. Weingarten, noting the high unemployment rate, said, "I think you have to consider buyouts before you consider layoffs. It is the only fair, humane way to do it."