Create Benefits Panel

To the Editor:

Mayor Michael Bloomberg, like Governor George E. Pataki, senses shadows hanging over the state and city budgets. In his 2006 State of the City address, Mayor Bloomberg said, "The only chance to avoid the budget's structural imbalances is to rein in health-care and pension costs that have spiraled out of control."

Our elected officials must meet the obligations to current and future retirees. They also must preserve sound fiscal practices and provide necessary public services while maintaining competitive tax rates.

Who will examine and quantify the impact of a wide array of important policy options raised by proposed changes in health and pension benefits and the resulting unfunded liabilities?

Public employees (taxpayers) do not shoulder the bulk of pension funding. In fact, their contributions to New York public employee retirement systems make up only a small part of systems' revenues. Earnings from investments and employee contributions comprise the largest part of revenues.

New York has a long and successful tradition of bipartisan cooperation, credible analyses, and long-term focus in the conduct of its fiscal affairs. Our elected officials should consider the creation of a statewide permanent oversight commission that analyzes each proposed item of a public-employee labor contract with particular reference to health and pension costs, actuarial soundness, and adherence to sound public policy. New York needs a permanent commission for three reasons:

1. Employee benefits are an increasingly complex subject area requiring a high degree of expertise and knowledge. An independent source of information with an institutional memory about health and pension benefits will help legislators, public employers and taxpayers.

2. Demands for changes in benefits require continuous supervision and attention. For example, an ill-conceived pension bill could have serious financial consequences that legislators and others will not fully recognize until many years later.

3. A permanent commission can recommend consistent policy to the perpetual stream of contract demands and proposed benefit legislation. There is need for continuity of policy based on information from interested groups that analyze state and city finances.

JAMES A. BEIRNE

Editor's note: Mr. Beirne is a former Assistant Chief City Actuary.