July 8, 2014

Court of Appeals Not Swayed by Cop-Union Case for Tier 3 ITHP


PATRICK J. LYNCH: Treat all cops equally.  

The state’s highest court has rejected lawsuits filed by two police unions seeking to require the city to partially subsidize the pension contributions of police officers and firefighters hired since 2010 as it does for more-senior ones who came on under Tiers 1 and 2 of the retirement system.

City officials said the decision by the Court of Appeals will save $500 million in contributions over the next 10 years.

City Paid Most of Tab

Under the Increased Take Home Pay plan, known as ITHP, the city contributed 5 percent of each worker’s pay to the pension fund and the employee would pay whatever was left. In a typical illustration, if the worker’s contribution was set at 7.5 percent of pay, the city ITHP payment meant the employee kicked in 2.5 percent.

Members of Tier 3, which began July 1, 2009 (no new cops were hired until the following year), have been contributing 3 percent of their salaries by law. If the ITHP had been applied, it would have wiped out their contributions entirely.

Police unions criticized former Gov. David Paterson, who vetoed a bill in 2009 that would have kept cops and firefighters under Tier 2 pension provisions. Successive two-year extensions of that bill had been approved since shortly after Tier 3 was created in July 1976 for the rest of the public-employee workforce statewide.

The veto meant that newly-hired cops came under less-generous Tier 3 pension provisions. Mr. Paterson also passed a law setting up a new pension tier for police officers and firefighters outside the city.

‘Unacceptable Inequity’

“It is our belief that there should be equal pay and benefits for all police officers wearing the blue uniform of the NYPD,” said PBA President Patrick J. Lynch. “Deviations in compensation caused by the ill-considered decision of former Gov. David Paterson to veto the Tier 2 renewal legislation has caused an unacceptable inequity among our ranks. If we cannot achieve equality through the courts, then we will continue to fight to achieve it through negotiations.” 

“I am deeply disappointed by the Court of Appeals decision,” said Roy Richter, president of the Captains’ Endowment Association. “This decision highlights how, with one strike of the pen in the middle of the night, Governor Paterson destroyed decades of hard-earned retirement benefits of police officers and firefighters.”

Keith Snow, who litigated the case for the city Department of Law, said, “This rational decision correctly interprets a key pension statute and will save taxpayers hundreds of millions of dollars.”

Once the Tier 3 pension plan was phased in, the PBA and the CEA sued in July 2010, contending that the city was violating labor agreements and city and state laws.

Won in Lower Court

The unions won in State Supreme Court, but the city appealed. The Appellate Division agreed with the unions, saying that the legislation showed “intent that the ITHP contributions continue to apply to police officers, regardless of their tier.”

The Court of Appeals disagreed, saying that it was unlikely that the Governor and the Legislature would set up a system where Tier 2 members contribute to their pensions and Tier 3 members—whose 3-percent contributions would be wiped out by the 5-percent ITHP—did not.

“Governor Paterson vetoed the [Tier 2] extension...explicitly so as to lessen the financial burden on state and local governments of pension costs for police officers and firefighters, and increased employee pensions are a major way for public employers who offer defined-benefit pension plans to reduce costs,” according to the court’s decision.

“It is difficult to believe that in December 2009 the Governor signed pension-reform legislation that substantially—and silently—undid his six-months-earlier veto by creating a non-contributory pension for the city’s Tier 3 police and fire members, while at the same time [similarly situated] police officers and firefighters elsewhere in the state were required to contribute 3 percent of their annual wages to the retirement system.”

Big Disability Impact

Tier 3 also drastically reduced benefits for officers injured in the line of duty. Police Officer Rosa Rodriguez was injured in a fire that killed her partner in the spring and it is still not certain whether she’ll be able to return to work.

If she can’t, instead of getting the tax-free disability pension of three-quarters of her pay under Tier 2, she would get between 33 and 44 percent of final average salary, subject to taxes and reduced according to the amount of Social Security disability benefits she would receive.

Mr. Paterson suggested that the State Legislature pass a one-time-only bill exempting Officer Rodriguez from the new disability provision. Police unions say Tier 3 disability provisions should be changed for everyone.