Peekskill City Manager Leery of Pension Stabilization Proposal

Brian Havranek, the acting city manager of Peekskill, said he will definitely discuss Gov. Andrew Cuomo's pension stabilization proposal with the Common Council.

But he still isn't convinced the plan, which would allow municipalities and school districts to look into lower rate pension rates during a 25-year period, fits into the city's longterm goals.

"The plan sounds nice, but on the bottom of it says that the municipality is still obligated for the full bill," Havranek said. "So somewhere in time, you have to make up the difference."

Cuomo's proposal would allow municipalities and school districts to lock into a fixed rate for pension payments. In the case of Peekskill, Cuomo's office estimates the plan could save the city $2 million in the 2014 fiscal year and $7 million in five years.

The locked in rates, which can be found here, would be 12 percent for the state Employees’ Retirement System, 12.5 percent for the Teacher Retirement System, and 18.5 percent for the Police and Fire Retirement System. Without the option, school district and municipalities are looking at average rates of 20.9 percent for the Employee’s Retirement System, 16.5 percent for Teacher’s Retirement System, and 28.9 percent for the Police and Fire Retirement System.

But when rates drop, as expected with the creation of the Tier VI Law last year, localities would still be locked into those rates.

Westchester County Executive Robert Astorino has already come out against the plan, which could save the county $40 million in the 2014 fiscal year and $140 million in five years.

“It's a gimmick and it's very bad," Astorino said Tuesday during a town hall meeting in New Castle.

Astorino is the latest official to come out against the idea. According to published media reports, elected officials who are skeptical about it include State Comptroller Thomas DiNapoli (who would have oversight of the plan) and Syracuse Mayor Stephanie Miner.

The city has hired only one new staff member has been hired under the Tier VI pension plan since it's been implemented, according Havranek. He said it is unlikely the city will see the amount of turnover necessary to have major savings from the Tier VI during the next few years.

"What if you've already gone through layoffs and retirement incentives?," Havranek said. "It's not like I have an aging workforce that I know will retire over the next six years and you're still obligated to pay the full pension amount."

Havranek also said that he needed to find out more information about the penalties municipalities would receive if they decide to opt out of the plan after opting in.

"It stabilizes you for budget time and that's nice because you don't get the 20 to 25 percent increases that can you throw your off," Havranek said. "But what if there is a year where a 20 percent increase is needed? You're still obligated to pay that off at the end."