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by Jay Gallagher

Thursday, February 18, 2010

Should one man control so much money?

A report out today about the state’s well funded pension system could be fodder for the debate about whether one person should be in charge of the massive $129 billion common retirement fund.
A report from the Pew Center on the States found that New York is one of only four states whose obligations to pay the pensions of state and local-government workers outside New York City are fully funded. In fact, it has more than enough - 107 percent - compared to the national average of 84 percent, according to the report.
This is a little jarring because typically in most measures of fiscal health, like taxes imposed, debt owed and per-person spending, New York typically ranks near the bottom of states.
But the state’s pension system is set up differently from those in the rest of the country.
Here, Comptroller Thomas DiNapoli, an independently elected official, is the sole trustee of the pension fund.
In other states, when times have gotten tough, governments haven’t chipped as much into pension funds as needed to keep them fully funded. This has often happened because the governor of the state has a hand in deciding how much to set aside for pensions and doesn’t want to raise taxes of cut other spending to meet the long-term obligation.
But in New York, DiNapoli can resist such pressure, since he reports only to the voters. (OK, to be technical, he was appointed to the job by the Legislature after Alan Hevesi was forced to resign in 2007, but he has to face voters this year.)
That little parenthetical phrase might give you a clue that the New York system has had, shall we say, a few problems. Hevesi pleaded guilty to using assets of the fund for his own personal use. And investigators have also found that top officials at the fund accepted gifts from people who wanted a piece of it invested with them.
For some, the answer to the problems is to put a committee in charge of the fund, the way state teachers, New York City workers and public workers in most of the rest of the country have done it.
But today’s report shows the merit of keeping it as it is.
OK, the report also found that New York has put almost nothing aside to pay for the medical benefits of retirees. But then, neither have most other states.

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