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ALBANY An actuary paid by public employee unions and yet relied upon by the State Legislature to determine the cost of proposals affecting New York Citys pension system underestimated their ultimate cost by at least $500 million, city documents and other records show.
In the hundreds of bills for which he has provided estimates to lawmakers since 2000, the actuary, Jonathan Schwartz, said legislation adjusting the pensions of public employees would have no cost, or limited cost, to the city.
But just 11 of the more than 50 bills vetted by Mr. Schwartz that have become law since 2000 will result in the $500 million in eventual costs, or more than $60 million annually, according to projections provided by Robert C. North Jr., the independent actuary of the city pension system, and by Mayor s office.
Mr. North and other city employees made the calculations on the 11 bills when they were before the Legislature, but for the other bills, no alternative to Mr. Schwartzs projections could be found. The New York Times reported last month that in an arrangement that had not been publicly disclosed, Mr. Schwartz was being paid by labor unions. He acknowledged in an interview that he skewed his work to favor the public employees, calling his job a step above voodoo.
As a result, legislative leaders said they would no longer rely on Mr. Schwartzs work, and a disciplinary board affiliated with the American Academy of Actuaries has begun a review of Mr. Schwartzs conduct.
The Legislature relied almost exclusively on Mr. Schwartz a consultant to , the umbrella group of municipal unions as well as to unions representing firefighters, teachers, detectives and correction officers to determine the cost of pension bills involving New York City employees.
Despite legislative leaders assertions that they undertake independent financial analyses of the pension bills, neither the Senate nor the Assembly could provide any records to bolster that claim.
Mr. Schwartz did not return calls seeking a comment for this article.
The episode has heightened the Legislatures reputation for being cozy with labor and for lavishing benefits on public employee unions.
Lawmakers appear to have two sets of procedures when it comes to pension bills, which are legally required to include so-called fiscal notes, or assessments of their financial impact.
While the Legislature has used actuaries that work for the government to assess potential costs to the state, they have used union consultants, and particularly Mr. Schwartz, to analyze pension bills affecting the city.
What is increasingly clear is that the city has been saddled with tens of millions of dollars in hidden costs due to Albanys broken process, said Farrell Sklerov, a spokesman for Mr. Bloomberg.
Mr. Sklerov added that the Legislature has withheld key information from the public and prevented any meaningful accountability as elected officials unwittingly vote on bills with misleading fiscal notes.
The stakes are especially high on pension bills, because under the State Constitution, once public workers are granted pension benefits, they cannot be reduced, even if they cost much more than expected.
Lawmakers and legislative aides said they gave serious consideration to objections or alternative projections provided by the city. And in many cases, the City Council was required to give a nod of assent through a so-called home rule message a formal request from the Legislature to consider a measure.
The Legislature has conceded that it needs to make changes. Last week, the Republican-controlled Senate introduced a measure that would require that the cost estimates for the bills affecting New York Citys pension funds be undertaken by the city actuary.
Another new Senate bill would require the disclosure of the source of the cost estimates. In the Assembly, Democrats have halted all bills under consideration that were vetted by Mr. Schwartz until new fiscal notes are drafted and are talking to the city comptrollers office about producing fiscal notes.
We are changing the entire process in New York, and rightfully so, said Senator Martin Golden, a Brooklyn Republican who sponsored several bills vetted by Mr. Schwartz. You have to start with a solid number.
He called it voodoo, and thats wrong, he added. People in the City of New York deserve more.
The most costly legislation analyzed by Mr. Schwartz was a bill passed in 2005 that entitled city employees who worked on the ground zero cleanup to disability pensions worth 75 percent of their salaries if they were later found to have diseases including cancer, respiratory illness and a variety of skin ailments.
City officials were concerned that the measure was written so broadly that workers could qualify even if their illnesses were unrelated to the ground zero effort.
Mr. Schwartz claimed the bill would cost the city no more than $5 million annually. In a detailed analysis, Mr. Norths office projected that the bill would lead to a net increase in future pension benefits of $495 million, costing the city $53 million a year.
Another law, passed last year, allows auto mechanics, electricians and other selected tradesmen who work for the city to retire at age 50. Mr. Schwartz said the bill would have no cost; The city said it would cost $150,000 per employee who opted into the program.
Considering that 113 employees bought into the program, the cost to the system will be roughly $17 million over time, or about $2 million annually to finance.
Another law, passed in 2001, removed a ceiling on pension credits afforded to city police and firefighters. Mr. Schwartz said the legislation would cost the city $5 million annually to finance; city officials put the annual cost at $12 million.
Mr. Schwartz also said that a bill now before the Legislature, which would allow thousands of city workers to retire at age 50, would have no cost for the city. Mr. Schwartz conceded in an interview last month that he knew the bill would actually have a significant cost, explaining, I got a little bit carried away in my formulation.
He added that he made his projections look as cheap as possible to favor his clients.
District Council 37 has refused repeated requests for comment from its executive director, .
Edmund J. McMahon, director of the Empire Center for Policy at the Manhattan Institute, which advocates for lower spending, said the issue reinforced the idea that Albany has a penchant to strike deals with politically influential unions without a consideration of the cost.
He said he had never been aware of any vetting done by the Legislature. Theres certainly little evidence of it.
Obviously, they should not do bills without estimates from the citys
own actuary, he said. And they also shouldnt be doing any
of those bills anyway, not any single one of them. The time has come to shut
down this game.
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