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September 22, 2018

Attorney General to Look for ‘Pension Padding’ in Fulton City Employee Overtime Data


Attorney General Andrew Cuomo announces the beginning of his office's study of public employee pensions at an event in Purchase, New York on March 24.  Photo provided by the Attorney General's office.

Attorney General Andrew Cuomo announces the beginning of his office's study of public employee pensions at an event in Purchase, New York on March 24. Photo provided by the Attorney General's office.

State Attorney General Andrew Cuomo has the city of Fulton’s public employees in his sights as he widens an investigation into what he calls “pension padding” — the practice of working more overtime in the years right before retirement in order to increase the pension.

Andrew Cuomo announced in Syracuse Thursday that he has asked for public employee payroll information from Fulton, the city of Oneida and the town of Manlius.

99 percent of public employees don’t pad their pensions with overtime, Cuomo said. “This is (about) the bad apple. These are the abusers. But the abusers make it bad for everyone.”

“An egregious case of this is potentially illegal,” he said, adding that if a department gave overtime to a particular employee for the sole purpose of inflating that employee’s pension, “we’ll prosecute that case.”

Cuomo announced the widening of his office’s investigation after a look at 50 local government payrolls across the state turned up what his office said was a pattern of higher overtime for employees in their final years before retirement.

Half of those municipalities showed a pattern of employees who worked some overtime throughout their careers, but worked significantly more overtime in their final years. A minority showed what Cuomo indicated was a more blatant pattern, of employees working no overtime for most of their careers, but working a lot of overtime in their final years.

Cuomo said that workers told him, “the system allows it. I’m just taking advantage of the system. You know what? It’s wrong to take advantage of the system.”

Pensions cost the state and its taxpayers a lot of money. Cuomo said that public employee pensions cost each resident of New York State $486 a year and state taxpayers had to pay $10 billion of the $20 billion cost of pensions in 2008. The rest is covered by the pension investment funds handled by the state Comptroller’s office.

Fulton’s 2010 budget sets aside $371,000 for police department overtime and $330,000 for fire department overtime. The two departments spend, on average, $1,920 a day and $58,000 a month for overtime.

Overtime for many public employees is covered by their contracts with the city. In Fulton, for instance, the firefighters’ union’s contract with the city requires at least 8 firefighters on duty at all times and firefighters work 24 hour days. An illness or injury forces the department to bring in a firefighter on overtime, creating 24 hours of overtime for each day a person fills in for another worker.  Vacations also create the opportunity for significant overtime.

Unions have maintained that it takes a full complement of police officers and firefighters to keep the city safe and the city’s relatively low crime rate and rate of fatal fires shows the benefit. Having two fully-staffed fire stations also keeps down fire insurance rates for homeowners. In the 1990s, fire insurers told city officials that if they closed one fire station, homeowner and business fire insurance rates would rise.

Mayor Ron Woodward has said that the city would like to reform its contracts with its unions in the areas of overtime and, for the fire department, minimum staffing. However, he believes the city is at a disadvantage. He said it’s hard to remove a benefit, once it has been granted, because both sides must agree. If the contract dispute goes on long enough, it can be sent to an arbitrator, where, Woodward has said, the employer is likely to lose.

Cuomo suggested four steps public employers can take to reduce overtime costs and inflated pensions:

  • Cap the amount of overtime any employee can receive in a year;
  • End the practice of giving out overtime based on seniority;
  • Have a single manager or unit make all overtime assignments;
  • Add staff, if necessary, to reduce overtime.

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4 Responses “Attorney General to Look for ‘Pension Padding’ in Fulton City Employee Overtime Data”

  1. David Guyer
    July 9, 2010 at 5:41 pm

    I applaud Attorney General Cuomo for calling attention to the practice of “pension padding”, however, I don’t understand what is illegal about it, as the State Legislature has allowed this to happen through legislation favorable to New York State’s Public employee unions.

    When I was 2nd Ward Alderman the entire council wanted to address issues in the Fire Department Contract, minimum manning, 24 hour work schedules, etc., but any hopes we had were quickly deflated when our labor relations attorney told us that trying to get anything out of that contract would be like pulling teeth and if we went to arbitration, we would most likely lose and end up paying more than the fire union had orginally asked for. The best that could be hoped for was to maintain the status quo, which is basically putting band-aids on bullet holes.

    For many years our New York State legislators (both Democrat and Republican) have been allied with the various public employee unions, as their contributions and get out the vote efforts were behind their re-election bids. Now we are left with monstrous future obligations to the NYS retirement system to fund employee pensions. Case in point, in the late 1990’s, when the stock market was rolling along, Governor Pataki and the legislature passed legislation that tier 3 and 4 members of the retirement system (anyone hired after mid 1976), no longer had to contribute 3% of their income to the retirement system after 10 years of service. If this money had continued to be contributed and invested, it would have eventually saved state and local taxpayers hundreds of millions of dollars per year (my guess).

    I am a member of the NYS Retirement System myself, and I will be able to retire at age 55 with 30 years of service at 60% of the average of my 3 highest years of pay, typically your last 3 years. No one in the private sector enjoys this type of benefit but they are expected to pay for ours. It’s even more lucrative for public safety employees as they can typically retire after 20 years. My union continues to spew propaganda as to how bad we have it though. The only answer I see is for continued changes in state law (creating a tier 5 of the retirement system was a step in the right direction). I hope future Governor Cuomo (does anyone think he won’t win?) will work hard to effect change in this area. As a public employee I for one don’t mind paying my fair share.

  2. Dave Bullard
    July 10, 2010 at 9:39 am

    Dave:

    It’s an interesting question, the question of what, exactly, is illegal about the current practice. Cuomo’s only explanation at the press conference was to say that if a given employee has worked only routine amounts of overtime for most of his career and, at the end of his career, suddenly works great amounts of overtime, that “could” be illegal and if he thinks it is, he’ll consider prosecuting. He uses the word “fraud”.

    As his office has not yet prosecuted anyone for so-called pension padding, we don’t know what his real standards will be.

    (And it’s worth noting that the direction of the Attorney General’s office will change in six months if Cuomo is elected Governor.)

    Seems to me he’d have an easier job going after the local governments themselves, by showing that there’s a pattern and practice of letting most or all employees who are close to retiring work large amounts of OT. The problem is that the local government has no money and the money it gets comes from taxpayers. So, a judgment against a given local government would mean that either the city cuts services to pay the judgment or raises taxes, or spends tax dollars to sue the employee(s).

    Which might explain the focus on the individual employee — he’s the only one with money.

  3. Mike Schroeder
    July 11, 2010 at 9:23 pm

    While I agree with Dave, as a member of NYS Teachers Retirement System where there are similar benefits, there is wording in the pension system rules that forbids any such attempt to pad one’s retirement with unusual earnings. So at least there is an avenue of pursuing recision of benefits if such earnings are determined. In my reading of news from this system I have never seen where a case like that has been pursued. Teachers work differently than police and fire as we are not hourly employees and salaries are pretty much fixed. Beyond doing extra duties like coaching or school clubs, which are not really big compensation, there is not much opportunity to get a big bump in pay. I think the management of the city should be held accountable for employees playing the game. We need to get away from this “you scratch my back, I’ll scratch yours” concept. The Common Council could establish rules for overtime to be distributed among all workers equitably and eliminate the most egregious exploitation, taking it out of the hands of the department management who invariably have risen through the ranks and watched while their previous departmental management has perpetuated this culture.

  4. Mike
    July 12, 2010 at 2:42 pm

    Story from Rochester – I think the Sr. firemen were buying the overtime from the new guys/girls to pad their retirement. That i think is illegal. Have heard that this is a common pratice with FDs . If their retirement were based on their base pay only I bet they would never take the overtime.

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