From the desk of Stanley Winter, RPEA President,

This week, in response to issues that came to light about past Comptrollers, it was proposed that a Board of Trustees be created to run our retirement system.  The Retired Public Employees Association has always opposed such legislation and continues to do so.  Several times in recent years this has been proposed by various groups and individuals.  The following observations in my article from 2006 remain valid in their sentiments. Watch our website, news releases and future newsletters on this evolving issue.

TIMES THEY ARE CHANGING . . . OR ARE THEY?

A little over two years ago, I wrote an article for this newsletter on the fallacy of a proposal by the New York Conference of Mayors and its suggestion that our Retirement System should be run by a Board of Trustees. This is the same group that, in 2004, eagerly supported the unconstitutional proposal to have lo-cal governments contribute less then their required payment to the Retirement System causing it to be under-funded. They were stopped cold by the State Comptroller, the constitutional protector and sole fiduciary of the Retirement System. They are being joined now by political opportunists and academics that haven’t bothered to look at the real world.

In the interest of full disclosure, I should state that, as RPEA President, I am a member of the “Advisory Council for the Retirement System”, as was my predecessor Cynthia Wilson. Also, I once worked in the Retirement System, leaving in 1972. I doubt there is anybody remaining who was there at the same time.

An article by Dan Janison of Newsday on May 14th quotes an NYU professor named Moss as saying “because the authority of the state comptroller is so vast, and is subject to so little oversight, it creates potential for abuse far more substantial than anything we’ve seen so far.” The Attorney General is quoted in the same article, saying “It’s not about one person. That’s the tip of the iceberg in some ways, and it is about very troubling, serious systemic conflicts of interest in the comptrol­ler’s office.” The first thing that should be noted is that these theories or opinions are just that and neither is presently substantiated by facts.

The facts, as we know them at this time, are that former Comptroller Hevesi’s misdeeds involved his misuse of a state employee’s time for his own benefit. It in no way compromised his management and fiduciary re­sponsibilities for the Retirement System. Second, the current investigation, as far as we know it from the newspapers, involves the former Chief of Staff to the Comptroller and his alleged misuse of a state vehicle and possi­bly his relationship with an investment banker who was also a contributor to Hevesi’s campaign. Compare those allegations to the fact that the Re­tirement System as of March 31st of this year was valued at $154.4 billion, up from $140.7 billion the previous year. Most of this was achieved under former Comptroller Hevesi.

Remember too, that each of the last three Governors (Carey, Cuomo and Pataki) all tried to raid the assets of the Retirement System or withhold proper funding. In each case, they were stopped by the Comptroller (Levitt, Regan, McCall and Hevesi) acting in his capacity as the sole fiduci­ary of the Retirement System. In such controversies, the courts have always decided in favor of the Comptroller.

It is also true that earlier this year I reported that our Retirement System is one of the best funded in the country at 97.7% funding. Compare that with states such as California, New Jersey, Oregon, Connecticut and many more that are seriously under-funded, plus cities such as San Diego and Pittsburgh. The current system of a sole trustee appears to have served us well!

A closer comparison might be the New York City systems. If you re-member, two of the problems we needed to overcome on our way to COLA were the aforementioned NYCOM and the under-funded NYC systems. NYC opposed the COLA because of the additional amount they would have to contribute to their systems to pay for COLA whereas our Retirement System and the State Teachers Retirement System already had adequate funds in their possession. The reason the NYC systems were short is that they are run by a Board of Trustees that include city represen­tatives and employee representatives. These representatives acted to short-change the funding of the City Retirement Systems in exchange for raises for current employees that the city otherwise could not afford. The track record of the New York City retirement systems and the actions of Governors Carey, Cuomo and Pataki in trying to use the assets of the State Retirement System to deal with current budget and fiscal crises is the reason we cannot afford to have a Board of Trustees run our Retirement System.

A final myth that needs dealing with is that the Comptroller sets investment policy on his own, in a vacuum. In reality, the Comptroller has an Investment Advisory Committee of nine of the most respected people in the field that helps determine the direction of the Retirement System’s investment.

Remember, no matter what good government or accountability rhetoric is used to justify a Board of Trustees for our Retirement System, it is wrong. OUR PROTECTION LAYS IN THE NEW YORK STATE CONSTITU­TION AND THE STATE COMPTROLLER’S ROLE AS THE SOLE FIDUCIARY OF THE STATE RETIREMENT SYSTEM.