State Rejects Arbitration Reform
(Just like so-called pension reform, it was all window dressing)
by Steve Levy
Sometimes, something is worse than nothing. Such is the case with the remarkably tepid changes that have been made by the State to the woefully expensive mandatory arbitration process. There were high hopes this would be the year the Governor would overhaul a mandatory arbitration system which has led to among the highest public safety salaries in the nation.
Mandatory arbitration has led to some officers on Long Island earning $200,000.00, with six weeks vacation, 26 sick days (over 100 paid days off annually), $300,000.00 in cash-outs upon retirement for unused sick and vacation, and pensions exceeding $150,000.
The Governor began the year in aggressive fashion, proposing a 2% cap on awards given for police salaries through arbitration, as New Jersey’s Chris Christie had accomplished. A hard 2% cap would help taxpayers significantly to control these ever-spiraling costs. Unfortunately, a backpedalling was foreshadowed by the Governor’s announcement that he was creating a study panel, with word leaking out that no reform would advance without union support.
This doomed any true reform. The creation of the property tax cap would have been dead on arrival had the Governor employed the same cautionary strategy requiring union approval as a prerequisite. Yet, oddly, he did so in the case of mandatory arbitration. Perhaps it was done to give the false impression that the state was providing real reform to taxpayers, while not alienating the unions.
Unfortunately, the final bill passed merely enhances an arbitrator’s ability to weigh the public’s “ability to pay” as a factor in the final award. This is purposefully vague to allow for continued outlandish awards while giving the perception that meaningful change occurred. If an arbitrator wants to get to a high number, he can back his way in very easily. That would not have been the case with a hard 2% cap.
The window dressing press release on arbitration was remarkably similar to the cop-out that was the so-called pension reform years earlier. Escalating pension costs are destroying local governments. In Suffolk, pensions have been increasing approximately $45 million annually. But, how could this be? Hadn’t pension abuses been eradicated?
Unfortunately, so-called pension reforms were as tepid as those enacted for arbitration.
The higher contributions and later retirement date were only for incoming employees. Present employees can still accumulate massive salaries in their last years to artificially inflate their pensions dramatically.
If the State was serious about enacting true pension reform it would eliminate factoring overtime into pensions for existing employees. It never happened, and therefore it will be decades before we see significant savings to the pension system.
Unfortunately, once even the lamest type of action is taken in Albany, the public is often cajoled into thinking the problem was eradicated and we can move on to the next topic. Next year there will be four other highly talked about issues that will monopolize our attention.
When someone asks, “When did they reform pensions and mandatory arbitration?” some State officials will say, “Oh, weren’t you around when that was done back in 2011 and 2013?” The politicians get to say that they did something, but the taxpayers will continue to bleed. Fortunately, some legislators are trying to bring about real reform. It’s time they get the support they need.