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Peekskill City Manager Leery of Pension Stabilization Proposal

Brian Havranek, acting city manager of Peekskill, said more research needs to be done before the city decides to opt into to Gov. Andrew Cuomo's proposed pension stabilization plan. Cuomo said the plan could save Peekskill $7 million after five yea

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."

Liz Claire January 31, 2013 at 02:41 PM
The crucial sentence appears on page 16 of the Cuomo's Executive Budget: “These stable rate pension contributions will dramatically reduce near term payments for employers but will require higher than normal contributions in the latter years.” In other words, this proposal kicks the can down the road, and ties the hands of future leaders. It would be the height of fiscal irresponsibility on the part of the Council to adopt it. Which means the Council is almost guaranteed to opt in, given their lack of financial sophistication and the naked self-interest in which they have acted in squandering the rainy day fund. Brian, I hope that you can persuade them that this is unwise. If they were to adopt it, they would be telling the Citizens of Peekskill that the Council lacks the political courage and financial knowledge to confront our problems head-on now. Ask them what 10-year government budgeting plan has ever worked out. (Or better yet, why is this wise, when Foster’s proposed long-term plan of 2007 has proven to be an abject failure.) If we look at recent history on the federal level, Reagan’s long term plan was as false as Stockman said it was. Clinton’s Plan didn’t pan out. And Obama is cynical enough to think that it doesn’t matter. Cuomo’s proposed 25-year plan that will bind future generations long after he leaves public service, makes used car salesmen seem paragons of moral excellence.
John Curran January 31, 2013 at 11:19 PM
I like the comment from actor City Manager that this topic "needs more research." So, the Council may hire a paid consultant to explain the changes to them, as usual. Now real news: 'Northern Westchester Examiner' January 29, 2013: Headline : "SALARY INCREASES APPROVED FOR CORTLANDT EMPLOYEES." Town of Cortlandt isn't that far away, so why the difference with Peekskill? The pension increases sure aren't freaking out Cortlandt government. They aren't firing anyone. Everyone I know is asking about our City Hall regime: "With another tax increase this year, where has our money gone?"
John Curran February 01, 2013 at 02:45 PM
By contrast, the Town of Cortlandt has given raises to employees for 2013. (see EXAMINER newspaper January 29) So, pension expenses cannot explain the most asked question around PeekskilL these days: 'WHERE HAS OUR MONEY GONE?"
The Enforcer February 01, 2013 at 06:19 PM
This is very sexual. I have erections

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