The sometimes stunningly large pensions paid to many of Buffalo's retired city employees don't come directly from the pocket of the taxpayer. If they did, we'd have gone bust a long time ago.
But it may be only a matter of time.
A cash-strapped state, tied as it is to the fortunes and follies of Wall Street, needs to create a less generous system, one that calls upon public employees to contribute, in most cases, more while they work -- and to draw, in some cases, less in their well-earned retirement. Failure to do so won't only hurt taxpayers, it risks the destruction of the system so many workers rely on.
The New York State Common Retirement Fund, managed by the state comptroller, paid out $6.84 billion in benefits last fiscal year. It took in only about $2.9 billion in contributions, about 10 percent from current workers and the rest from the taxpayers.
That's what happens when, say, police officers are allowed to tot up so much overtime in their last years on the job that people whose base salary never topped $60,000 a year walk away with annual pensions of more than $100,000 for the rest of their lives.
And it's what happens when the state and local government pension system draws nothing from working police officers and firefighters and only 3 percent of salary from other workers for a maximum of 10 years.
The money that flows out can be so much more than the money that flows in because the fund -- with a total value of $153.9 billion as of March 30 -- is invested in stocks, bonds, real estate, equities and all those indecipherable instruments that were worth a lot of money a few weeks ago.
The late unpleasantness on Wall Street does not bode well for the continuation of such a system. The last time the financial markets took such a hit, in the wake of the 9/1 1 terrorist attacks, the contributions required of state and local government entities went up about as fast as the Twin Towers came down.
Just for the City of Buffalo, the amount demanded by the comptroller to make up the Queen City's share of the retirement fund tripled in one year, from $5.2 million to $15.6 million. And it has continued to go up, with City Hall budgeting $23.6 million for its fiscal 2008-2009 contribution.
In 2006, the last year for which all of the books are audited and closed, the city's contribution to the fund was $22.4 million. That's half again what it paid for trash collection that year and nearly five times what it paid for all culture and recreation services.
The calculation of pension entitlements is a formula of terms that are set by both state law and locally drafted union agreements and employment contracts. Such laws and contracts, however well or poorly considered or negotiated, are promises made to workers who rely on them.
The fact that career-end overtime counts, and the fact that police and fire pension beneficiaries pay nothing into the fund while they work, are matters of state law that can be changed only by an act of the Legislature. The amount of overtime hours that employees are allowed to accumulate is set by local contracts. Both need serious re-examination. Overtime credits could be capped, or the look-back time for calculation of average wages could be lengthened; pension formulas could be reset for newly hired workers.
Any public safety department is going to have to pay overtime, sometimes in considerable amounts, to cover its shifts. But allowing so much of the overtime to be claimed by so few people not only distorts the pension system, it also raises questions about how the public safety may be endangered by officers who are often on the downward slope of a 16-hour day.
Public employees, particularly those who put their lives on the line every day, have earned a proper pension. But part of what they've earned should include a system that is affordable to the taxpayers, and that isn't in danger of collapsing the next time the stock market tanks.