Haven't We Been Through Enough?

In my last post, I wrote how the early retirement incentive being debated in Albany. In short, the incentive would allow almost any public employee in the state to retire by the end of the summer if they have 25 years of service and are 55 years old. Anyone who qualifies would get up to a three year pension credit if the choose to retire early.

This is means that almost any public employee in New York who is 55 years old or older and has 25 years in will be able to retire with 28 years.  I ended the post writing that it didn't seem like. abad deal.

And it really isn't for most public employees. Typically, the retirement rules require 30 years of service and the bills currently before the Senate and the Assembly would shave five years off of that. That's a very good deal for most public employees.

It's a great deal for NYC Sanitation workers. A great deal for NYC Custodians. An amazing deal for  DC 37 members. It's just a great deal all around. 

It happens to be a terrible deal for one type of public employee: The New York City School Teacher. Why? Because an unusually small amount of city school teachers will qualify.


Many city school teachers, who would otherwise have qualified for the package, had already opted into another 25/55 retirement plan all the way back in 2008. That plan was a trade; the teacher union agreed to a merit pay scheme by the Bloomberg administration and, in exchange, a special 55/25 early retirement incentive was offered to all city teachers. Anyone who wanted could opt in, pay a small amount from each check (1/85%) and, by the time the reached their 25/55 threshold, could retire. Teachers have been reaching their 25/55 threshold, and have been retiring under the plan ever since. (In 2019, around 8,500 city teachers retired. Many under this plan (see page 139)).

The 2008 deal wasn't made to all public employees. It was only offered to school teachers of New York City. 

Gov. Eliot Spitzer is poised to approve a deal that would sweeten retirement incentives for New York City teachers, a move that their union and Mayor Michael R. Bloomberg support but that budget watchdog groups say is financially risky.

Because Mr. Bloomberg has agreed to the measure, which would allow teachers to retire five years earlier than they can now and still receive full pension benefits, Mr. Spitzer is likely to sign it, according to an administration official who did not want to be identified because no final determination had been made.

And because of this, city school teachers will benefit least from the incentive that is currently being debated in Albany (see my last post here for a link to the bills in both houses of the legislature). 

So when I said 'not a bad deal', I was wrong. This is a pretty bad deal for New York City teachers.


Haven't we been through enough? The Post -The NY Post- has even caught on to how bad city teachers have been hurt over the past few months, noting that teachers haven't even been informed of how many of us were exposed to COVID back in March. City teachers had to petition to even have our schools closed in the middle of the month and almost everyone I know does not trust in the processes of the city school system to adhere to CDC guidelines next Fall. Now they face a retirement incentive that will incentivize precisely (or very very close) to no one who teaches in New York City.

--->Early Retirement Bills Are Now Taking Shape in Albany<--

Last post, I wrote about the possibility of a buyout so teachers could retire early. These buyout plans are now taking shape in Albany, with one particular plan looking like it has lots of support from both houses.

The Assembly has had bills around for months, some since last year. Many of these had been recently dusted off due to the crisis but, up until recently, the Senate had only one -a paltry looking bill that did nothing for Tier II employees.

These days, nothing that we see on the New York Senate or Assembly website are very trustworthy. Albany has become very opaque and the governor's achievement of emergency powers has accelerated this "behind closed doors" trend. So it is important understand that, due the extreme secrecy in Albany, none of these bills may amount to a hill or beans (which I think is nuts and should anger everyone, but ..  I digress).

Having said that, the recent addition of new bills has all the markings of a serious piece of legislation. In the Assembly, the bill is A10595. It's matching bill in the Senate is S8599 . The Assembly version has been re-published on the Senate website here. The bill as it appears in both houses was introduced on the same day (June 5) and have multiple cosponsors. (In the legislative world, these are significant markers that bill has some juice to it).

The bill offers an Early Retirement Incentive to almost every public employee in the state (as long as the employer chooses to offer it) who is ... 55 years of age or older and (that's *and* everybody. Not *or) has 25 years of service in the retirement system.

For those folks .. folks who make the 55/25 threshold, the state would offer up to three years of pension credit (1/12 of credit for every year served up to three years).

So, if you make the threshold .. if you're 55 and have 25 years in, you may be able to retire with no penalty and with 28 of service in. This is a no brainer for some people who fit the bill.

I said almost. Looks to me like employees of CUNY are explicitly exempt. Take a look for yourself.

55/25
3 years credit

Not a bad deal.

Teacher Buyout! ... ?

Buckle up.

Cuomo's departure from his daily COVID briefings allows him and the state's top leaders to focus on the other pressing issues of government. Those issues include long overdue social justice, finding a way to grow the economy after the COVID collapse and finding ways to plug to the $61 Billion dollar hole in the state budget. The governor still has huge emergency powers at his disposal and will probably decide each and every item associated with these challenges himself (and he'll be doing it behind closed doors and away from the press).


One such item that must be decided? A buyout: An Early Retirement Incentive for NYS, and in particular, NYC  teachers. The UFT president indicated that every single public employees union in New York City has asked for an early retirement incentive this year in order to help balance the New York budget and avoid any layoffs (retirement shifts a teacher's salary burden from the budget to the pension system, thus alleviating the burden on the budget). Early retirement is absolutely not a guarantee and almost any talk about it would be a little distracting. But a quick look back into history, just to review how both of those incentives looked, is definitely worth a. little time.

(I used the NY Times website to look these up. You may need to be logged in to view these links).


Two Buyouts

There were two early retirement incentives during the 1990s. One was offered in 1991 and another in 1995. These could serve as pretty good points of reference because both came as a result of enormous city and state governments budget deficits similar to what the city and state are facing today.

1991

In 1991, an early retirement incentive was offered to any teacher who was 55 years old *or* had 30 years of experience. Those folks (and only those folks) were able to get three years of retirement credit added to their pension. Teachers had just 4 weeks -between June 5th to July 5th-  to decide to retire by September. Here's what the Times wrote about it back then:

"Under the retirement plan, teachers who are at least 55 years old or have at least 30 years of service who choose to retire by July 5 can have a maximum of three extra years of service added to their pensions.

... A 55-year-old elementary school teacher who worked for 25 years would, upon retirement, normally get 50 percent of her last year's salary plus 1.7 percent more for each year of service beyond her 20th. Thus her pension would amount to 58.5 percent of her last year's salary...

With the incentive, the teacher would get credit for three more years at 1.7 percent a year -- a total of to 63.6 percent of her final year's salary."

That buyout eventually lead "... 4,200 teachers and 700 principals and supervisors ..." to retire early -about 8% of the teaching corps and just over 12% of the money used to pay teachers (because, don't forget, old teachers cost more to pay). It led to some teaching vacancies the following Fall.

But it's worth noting that this also led to an increase in the number of school leaders who were women and who were persons of color and, to that end, represented a very real turning point in the process of who led city schools. Eventually, the city did hire roughly 2000 new teachers for the Fall and that helped to create a younger teaching corps for the city. (A younger teaching corps in our time of 2020 would almost certainly guarantee the creation of a more diverse teaching corps; more folks who are persons of color and less folks who are white). 



The 1995 buyout was open to anyone who was over 50 and had at least 10 years of experience. 

"Under the plan, retirees get an extra month of service credit for each year they have worked, up to a maximum of three years. A teacher who had worked for 24 years could take the incentive and walk away with two extra years of credit toward the pension [retiring with 26 years of service toward their pension]. So far, those who have are taking early retirement are typically 55 or older, make about $60,000 and have at least 20 years of experience, board officials said."

While open to anyone over 50, the buyout was really geared toward anyone who was older than 55 and had at least 25 years in the system. It just didn't make much sense for very many others to take advantage of. The 1995 buyout agreement came along with a guarantee of no layoffs for three years and it's estimated that around 3,200 teachers took it. We have a much younger teaching corps in 2020. It would be interesting to see if something like this would work.


There are other issues to think about as well. Both incentives came during a budget climate that left both city schools and the teacher union with deep scars that lasted for more almost a decade.

Also; both buyouts saw teachers who did not qualify for the incentive return to a very difficult environment in schools. With no budget money beyond basic salaries and very little opportunities for the children they teach beyond regular classes (which, themselves, were badly underfunded), the following school years held little prospect for anything beyond the bare minimum of educating. I don't suffer bare minimum very well and many teachers who work well into the night don't either.

In both cases, the teachers who were left also faced the very real possibility of painful layoffs. In order to avoid layoffs in 1991, teachers voted to take a pay cut of 1.5% of their salaries, in the form of  a loan, to help the system balance its budget. That money was to be paid back in later years. In 1995, the UFT negotiated a no layoff agreement for three years, but then negotiated a contract for 0% wage increases and faced a near insurrection from among their members as a result. All that for no layoffs (and, in 1991, for the guarantee that the buyout would be supported by the head of the NYC school system).

And there was other fallout. In 1995 (a year that was, surely, a mess for city schools), the UFT was left with a large portion of angry teachers who, not qualifying for the buyout offer, became more active within the union. Many of those teachers organized a "vote no" campaign against that 0% contract -and won. At the end of the day, the budget woes caused the largest (by number) and longest (by years) anti-leadership movement in the teacher union's history. That movement has still not settled down to this day. That's how deep the damage was in 1995.

So, if a buyout is offered in 2020 -and it may not be offered at all- it may resemble either of these incentives. Would either of these work for you? Neither of them work for me.

If you were you around during the 1991 or 1995 incentives and feel like I missed something, drop a comment and let me know. I'll update in the main section.