The Streets Were Paved with Gold - Ken Auletta [95]
In New York’s Wonderland, almost $2 is spent on pensions, leave and fringe benefits for every $3 spent on salaries. These benefits include:
Pensions: After debt service, pension benefits are the largest nonservice delivery item in the city’s budget ($1.2 billion in fiscal 1979). Taxpayers contribute approximately 90 percent of the total cost of funding these pensions, which offer half-pay retirement after a specified period to all city employees. Workers were supposed to contribute 25 to 33 percent of the cost, but as seen in Chapter 2, special legislation (ITHP) increased the city’s share while pension underfunding reduced the employees’ share. Some city employees contribute less than others—transit employees hired prior to 1976 contribute nothing. Most public and private retirement plans compute retirement benefits as a percentage of the retiree’s 3 to 5 highest paid years. New York does it differently, allowing employees to retire on their final year’s pay—leading to overtime abuses and quickie promotions. One of management’s contract demands—rejected by the Transport Workers Union in their 1978 negotiations with the Transit Authority—would have limited retirements to 120 percent of pay. New York also excuses retirees from paying city and state income taxes on their pensions. However, not all retirees have it so good. Approximately 3,000 widows of police and fire officers subsist on frozen pensions of $106.66 a month—less than $1,300 a year. Unlike many cities and states, New York does not have cost-of-living escalators built into its pensions.
Social Security: Like other employers, the city pays half the cost of its employees’ Social Security contribution ($234 million in fiscal 1979).
Health Insurance: The city pays the full cost of health and hospital insurance for each employee and his or her family ($183 million in fiscal 1978). Health insurance coverage is also extended to all retirees and their families, including retirees in their forties who hold other jobs. Unlike New York, the federal and most state governments require employees to contribute half the cost.
Welfare funds: The city supplements health costs with what are called “union welfare funds” ($127 million in fiscal 1978). These are solely administered by the unions, though the city pays the full costs. Among the benefits offered: free prescription drugs, free eyeglasses and dental care for all employees and their families, free legal services, free psychiatric counseling, education and “training” reimbursement, free tax and pension counseling. Partial welfare benefits are granted to part-time employees after 6 months. The city pays between $350 and $420 per full-time employee, yet these funds are called “union welfare funds.” Workers often come to believe the benefit is provided by their union, not the city.
A special annuity retirement fund is provided all uniformed employees, transit workers, and teachers (about $36 million). Beginning with sanitation men in 1967, the city agreed that for each day the employee was on the payroll—including vacation, sick leave and paid holidays up to a maximum of 261 days a year—the city would pay $1 to an interest-bearing account. When the sanitation worker retires, he can draw regular annuity payments or collect one lump sum payment of principal and interest. The sanitation union’s annuity booklet advertised that a worker, after 30 years, could receive $30,750. Once sanitation workers captured this benefit, all other uniformed employees demanded and won it. In 1970—an election year—the governor and state legislature gave it to teachers. Annuity benefits extend to chiefs as well as indians, and are not always limited to $261. Certain police officials, for instance, receive more, as do teachers with at least 8 years’ service (who get $400 annually) and many transit workers (who receive $500 annually).
Though Gracie Mansion is provided as a free residence, a mayor’s pension base includes the $30,000 “cost” of the Mansion. This practice, begun years ago,