January 31, 2011

Current Cops, Firefighters Threatened by VSF Push

Would Also Affect COs


Mayor Bloomberg's call in his State of the City speech to discontinue providing Variable Supplements Fund payments to cops, firefighters and correction officers once they retire would have provoked anger among the unions representing those workers even if it applied only to future hires.

The fact that it would affect those already on the job who do not yet have 20 years' service triggered expressions of outrage by several key uniformed union leaders that was tempered only by their belief that the measure has little chance of succeeding in Albany.

Accuses Mayor of Hypocrisy

"It completely contradicts everything he has previously said about having a commitment to people already on the job," Uniformed Firefighters Association President Steve Cassidy said, referring to past statements Mr. Bloomberg had made in the context of contract negotiations that implemented reduced pay scales for those not yet hired as Police Officers and Firefighters.

Detectives Endowment Association President Michael J. Palladino, who attended the Mayor's speech, was under the impression that his plan to cut short the VSF payments would affect only those not yet on the job, as was City Council Member Peter F. Vallone, who chairs that body's Public Safety Committee.

But the Mayor in his address referred to eliminating the $12,000 annual payment to "future uniformed retirees," and an aide, who spoke conditioned on anonymity, said the legislation he is seeking would cover anyone who has not yet completed 20 years of service, the point at which cops and firefighters are guaranteed the VSF payment. (Those who retire because of disabilities prior to that point are not eligible, and 20-year correction officers and retirees, who won the VSF right a dozen years ago, are currently not receiving payments because a condition of their bill allows suspension when stock profits from their pension fund are insufficient. They will see those payments permanently implemented in 2019, however.) The Mayor said the legislation would save the city $200 million a year if enacted.

Mr. Palladino accused Mr. Bloomberg of having taken a "disingenuous and misleading" position to make the case for restricting the VSF, starting with his characterization of it as a "holiday bonus" because it is paid in December. He noted that the current structure for cops and firefighters is based on a 1988 agreement with the Patrolmen's Benevolent Association that was later replicated with the other police and fire unions that allowed the Koch administration to withdraw $100 million from the police VSF fund once it was converted from a payment linked to stock-market profits to a defined benefit.

As part of that deal, the DEA leader continued, the unions were also required to accept a reduced pay scale for future hires under which it took them five years rather than the traditional three to advance to maximum salary.

"Every guy who is still on the job is still paying for that 'holiday bonus,''' Mr. Palladino said. The reduction in the pay scale effected more than two decades ago still "gives the city a recurring cash value for every police officer that comes on the job, and any police officer who gets promoted," since the same elongated scale is applied for each rung on the NYPD ladder. "Every single benefit we gained in which we gave up something, now the administration's looking to take them away in one fell swoop."

PBA: 'City Reneging on Deal'

Patrolmen's Benevolent Association President Patrick J. Lynch made similar points, asserting, "Having realized billions in benefits, the city now wants to renege on the agreement. We intend to hold them to it."

He was referring to the fact that in the late 1990s, when the stock market was booming, it was estimated that the Giuliani administration reaped $4 billion in additional funds for its operating budget that it would have had to pay into the VSF if not for the conversion of the benefit a decade earlier. Mayor Koch had sought the change because he thought it unfair that the city had to contribute money into the VSF any time the Police Pension Fund's stock investments produced yearly earnings above 6 percent, but could not withdraw money in years when returns were subpar. Those terms had been extracted by the police and fire unions in the late 1960s in return for their pension representatives consenting to allow the funds to invest in the stock market.

Mr. Palladino said he was encouraged that Mr. Bloomberg had appointed former Mayor Ed Koch to lead his effort to secure broad-based pension reforms in Albany, saying that his knowledge of the VSF's history would lead him to discourage the current occupant of City Hall from trying to revamp the eligibility standards.

Mr. Koch, however, was noncommittal when asked specifically about the VSF proposal, saying in a phone interview that he wanted to examine the Mayor's entire package of proposals and then determine "what the city can afford, what the city can't afford."

'City Can't Be Trusted'

Mr. Lynch called it ironic that Mr. Bloomberg was seeking to overturn the deal Mr. Koch made 23 years ago, which included the provision that the VSF payments would be provided to all future cops at the current level, at the same time that he is asking the State Legislature to transfer its authority to approve all pension changes to his administration. He said the Mayor's push on the VSF showed "why pensions have to be the subject of legislation: because the city can't be trusted to honor a negotiated deal when it becomes inconvenient for them."

The practical impact of discontinuing VSF payments—which begin only after a retiree or employee has compiled 20 years on the job—would be to make "service for the city a resumé-builder [rather than] a career," according to Captains Endowment Association President Roy Richter.

The VSF payments, while derived from pension-fund earnings, are not considered to be pension benefits, which by state law cannot be reduced once an employee joins the retirement system. Mr. Bloomberg has crusaded against them for the past couple of years, aided by both the New York Post and the business-funded Citizens Budget Commission, which have referred to them as "Christmas bonuses."

The Mayor had told his audience in Staten Island, "City taxpayers just cannot be expected to give substantial holiday bonuses when so many of them are out of work or having their own wages frozen or cut."

'Won't Settle for Chocolate Bars'

Correction Officers Benevolent Association President Norman Seabrook remarked, "The Mayor has to come to grips with the fact that he's in a municipality rather than the private sector. At his private-sector company, he gives the employees chocolate bars and fruit so they won't take a lunch break, but all workers deserve a lunch break and we're not going to settle for chocolate bars. Balancing the budget does not mean balancing it on the backs of blue-collar workers."

To take effect, the proposal would have to be approved by both the City Council and the Legislature. Mr. Vallone, whose father during his tenure as City Council Speaker was a prime mover in getting VSF coverage for correction officers, said he was scheduled to meet with police-union leaders and wasn't ready to commit to specific elements of the Mayor's pension overhaul plan, but "the basics are necessary. If we don't take action now, the whole pension system collapses, and nobody benefits from that."

Peter J. Abbate Jr., who chairs the Assembly Committee on Governmental Employees, said he was not familiar with the details of the Mayor's plan but that he was not happy that no one from the administration had briefed him on its elements or a series of extensive civil-service reforms the city is seeking in Albany.

Problems With His Style

"Most of the problems the Mayor faces is the way he presents things," Assemblyman Abbate said, citing the process by which Mr. Bloomberg appointed Cathie Black as Schools Chancellor as another example.

Mr. Palladino—who said the Mayor had made it seem as if the VSF came about because "the unions put some flim-flam over on the city"—and Mr. Cassidy agreed but contended that he used that style because he couldn't make the case if he relied strictly on the facts.

"I'm gonna do everything in my power," the Firefighter union leader said, "to make the Legislature aware of the history of the Variable Supplements Fund. This was negotiated, it has reaped the city hundreds of millions of dollars, and now they want to pretend none of that ever happened."