Comptroller Liu: Public Pension Dialogue Mired In "Misdirection"

New York City Comptroller John Liu again made a visit to our neighborhood, this time to speak before Community Board 15 on Tuesday about budget issues, fiscal efficiency and to hear out neighborhood concerns about city spending. In doing so, the visibly exhausted comptroller took a shot at dispelling popular myths about public pension plans and pension padding, among other topics.

“It’s not an easy time to be the CFO of anything, let alone the City of New York,” the comptroller said. “My priorities have been to find the waste – and there still is a fair amount of waste in city government – and root out the fraud and abuse that unfortunately has continued to occur in some quarters,” returning that money to be used towards important government programs.

It’s the third time in less than a year that the citywide politician came to the area. In June 2010, he railed against Albany and inefficiency at a Manhattan Beach Community Group meeting. He returned to speak before the group again in December, this time criticizing “back-door taxes” in city government, like the water rate increases.

Liu spoke about his responsibilities and a handful of achievements for less than eight minutes, before spending nearly 40 minutes answering questions from the audience. Highlights from the Q&A include his positions on:

• Contractor/consultant inefficiencies in city government: Liu said the city is better served by in-sourcing rather than out-sourcing, an argument bolstered by a deputy mayor appointed by Mayor Bloomberg to streamline city government. The deputy mayor said using city employees rather than hiring outsiders results in better quality and better dependability in the long-term, according to Liu.
• Public pension plans: Despite popular perception, Liu said it is not more cost effective to go from a defined benefit to a defined contribution pension plan for city employees. Since the idea of a pension plan is to provide retirement income security. To provide the same level of income through a defined contribution plan (401k) versus a defined benefit plan (traditional public pension plan), it costs 46 percent more on average. “There has been some misdirection by different officials in the country … about what defined contribution and defined benefit plans are … The defined benefit is the more cost-effective way in the long-term,” Liu said.
• Contractors used in the public education system: “The outside contracting budget from the Department of Education has ballooned in recent years to the point where a lot of these contracts are very questionable,” Liu said. He pointed out that state legislators included a provision in their recent renewal of mayoral control to include a previously non-existent review process to go through the comptroller’s office. He said he has already refused to sign a $20 million contract to hire outside consultants to help the DOE recruit new teachers at the same time they were laying of 4,600 existing teachers. “We didn’t know whether to laugh or to cry when we got that,” he said.
• Padding pensions with overtime: Again, despite popular perception, this is not an actual phenomenon, Liu said. Following complaints from the public about NYPD and FDNY padding overtime in the years before retiring, his office looked into the numbers. What they found was that NYPD and FDNY personnel see 15 to 20 percent overtime in the years before retirement. However, looking over the course of an FDNY or NYPD employee’s career, they have 15 to 20 percent overtime – so there is no padding occurring on a broad scale.

Aside from these highlights, Liu also answered questions about street repair, sales tax enforcement and MTA bus shelter contracts (a topic he said he’ll look into after Sheepshead Bites’ own Allan Rosen brought to his attention).

After the Community Board 15 meeting ended, Liu went to Roll-N-Roaster for a quick bite to eat. He earned it.