Schenectady uniform officers retire to big raises

Overtime unavailable, other public workers are unable to cash in

Sunday, September 1, 2013
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— It’s the holy grail of pension maximization: getting enough overtime to retire at full salary, rather than the half-salary usually promised to people in the state retirement system.

But some Schenectady police and firefighters have managed far more than just a full-salary retirement: They ended their careers with a pension far higher than their final salary, and the amounts are crushing the city financially.

Schenectady is now spending one-twelfth of its budget on pension payments. This year, the city budgeted $6.3 million for pensions, the majority of it for police and firefighters, and that number is expected to rise even though the city has reduced staff and cut back on overtime.

Schenectady's top 5 pensioners

• Police Investigator Daniel Moran, $84,649. Base salary: $63,769

•Deputy Fire Chief Rodney Rosate, $82,894. Base salary: $71,589

•Fire Capt. Peter Zeppetelli, $81,310. Base salary: $54,481

•Police Lt. John Hamilton, $80,242. Base salary: $65,098

•Fire Lt. Joseph Morgalis, $78,879. Base salary: $59,014

Meanwhile, other workers are retiring with $15,000 or less in their pensions because their positions did not offer any chance for overtime.

Schenectady Councilwoman Barbara Blanchard gets $12,000 for her 20 years as a child protective department supervisor for the county. Blanchard, who is now disabled from a stroke, must rely on that money to help pay for caregivers.

Her husband, Art Edelstein, said the $80,000 pensions drawn by police and firefighters are deeply unfair by comparison.

“It’s offensive to every worker like Barb and myself whose income is fixed” because there were no opportunities for overtime, he said. “I can’t tell you what a sore point it is for me. I consider it inappropriate and unfair.”

Blanchard is also receiving pay as a councilwoman until the end of the year, when her term expires.

The problem goes beyond fairness. The pension system is underfunded because of the way in which workers increase their pensions.

It’s the result of hard work — grueling overtime over the course of several years — and a careful calculation many police officers and firefighters can do in their heads.

Depending on their tier in the retirement system, they can only increase their salary by 10 to 20 percent each year, so they have to build up overtime pay over the years, pay that could more than double their pension.

The trouble is that much of the increase happens in the last few years of their career, taking the pension system by surprise and leaving it underfunded. The pension system was designed to invest money over the course of decades.

Municipalities send money to the pension system every year to invest in each worker’s retirement, with the goal of fully funding that retirement by the end of the worker’s career. They calculate the amount needed each year based on the worker’s actual earnings.

But when a worker suddenly accelerates earnings, there isn’t enough time left for the city’s payments to grow before the worker retires. To keep the system’s investments healthy, municipalities have been required to contribute more and more. Schenectady now pays $6.3 million; nine years ago, it paid $4.8 million.

Public Safety Commissioner Wayne Bennett said the state can’t retroactively change benefits that were promised to workers years ago.

“Like it or not, a lot of these agreements were negotiated in better times,” he said. “Times have changed, but you can’t take them back.”

Still, he’s sensitive to the financial problem.

“We have cut the overtime in this department significantly,” he said. “We’re aware of the budget crisis. We don’t want money to be wasted.”

Gov. Andrew Cuomo has criticized police and firefighters for using overtime to take home much larger pensions that the system was designed to pay out. While the pension fund also lost money in its investments during the recession, Cuomo blames much of the underfunding on extreme overtime.

He calls it “pension padding” and has instituted new tiers with stricter limits on the amount of overtime that counts toward a worker’s pension. Instead of a limit of 20 percent of the previous year’s total income, new workers’ pensionable overtime is capped at 15 percent of base salary every year.

That means workers won’t be able to ratchet up their pensionable income over the course of a few years. No matter how much overtime new workers perform, only a small portion will count toward their pension.

But those limits will only affect workers hired after 2009, so the city won’t see any change in costs until at least 2030. For now, Assistant Police Chief Michael Seber said, maxing out pensions through overtime is a constant temptation.

He called it the “carrot right in front of them” and said many police officers do the calculations necessary to determine how much overtime will help their pensions.

“Before you go to retirement, you start to think about the financial numbers,” he said. “It obviously helps them financially.”

Firefighters make the same calculation. Of the city’s top-paid pensioners, firefighters make up seven of the top 10.

Fire Capt. Peter Zeppetelli managed to retire in 2006 with an annual pension that was $27,000 more than his full salary. He had been paid $54,500; his pension is $81,300. He benefitted from a retirement program that based his pension on his income in his last year of work, allowing him to pour on the overtime for just 12 months to increase his pension for life.

The state and city provided retirement and salary records to The Sunday Gazette in response to a Freedom of Information Law request.

The records show that maxing out a pension isn’t new — as far back as 1988, firefighter Thomas Norris managed to retire with a pension just $700 less than his final salary. But getting more than their final salary was so difficult that city Personnel and Benefits Administrator Kathy Finch was startled to hear anyone had managed it.

Even the state booklet on the retirement system suggested employees would probably never hit the 20 percent income limits, which stop employees from maxing out their pension with just one year of extreme overtime.

“A 20 percent increase from one year to another is unusual. Therefore, most Tier 1 members are not affected by this limitation,” the booklet said.

It’s not easy, but dozens of Schenectady police and firefighters have hit that limit, year after year. Still, managing to earn a pension higher than the worker’s final salary isn’t easy. Police Detective Arthur Zampella, who led the city’s overtime pay lists for years because he routinely answered middle-of-the-night calls, didn’t hit his salary when he retired. He came close, but he fell short by $300.

Seber remembers Zampella’s dedication to the job, not his pension.

“He answered the bell any time, any day,” Seber said. “We don’t have a lot of those officers now.”

Zampella was the department’s go-to man for the hardest investigations, including interviews of children who had been sexually abused. He often worked two shifts a day, coming back to work whenever detectives needed his unique skills. But he couldn’t lift his pension over his salary.

Other police found ways to get there.

The top pensioner in the city, police Investigator Daniel Moran, retired in 2011 with a pension of $84,600. His salary had been $63,800. Moran, who worked for 38 years, was one of the last officers in Tier 1. That tier promised officers a pension worth 75 percent of their final salary.

He picked up the additional $36,200 through overtime, paid by the federal government because he was assigned to a federal task force.

Others lifted their pay through a few calculated years of overtime. In some cases, they also benefitted from injuries.

Police Lt. John Hamilton retired a year before Zampella, in 2008. He has a pension of $80,000. His last salary was $65,000.

He put in three years near the top of the city’s extreme overtime list. From 2002 through 2004, he worked the equivalent of 30 extra hours a week, every week.

The retirement system uses the worker’s top three years’ pay to calculate the pension. Three years was all he or Zampella needed to boost their pay.

While Zampella finished with a much higher overall income and more years of service than Hamilton, Hamilton got a higher pension because he retired under the accidental disability system, which allows a 75 percent pension.

Saving up vacation time helps, too. Workers get a payout upon retirement, and that money counts toward the pension calculation.

Edelstein, the retired state worker, said he’s getting an additional $2,000 a year in his pension because he didn’t take all of his vacation time.

“That’s what they tell you: make sure you max out unused vacation time,” he said.

Mayor Gary McCarthy said some of the complaints about high pensions come from those who wish they could have done the same thing.

“I think some people view things with envy,” he said, “even though you want people to be well paid. That built the middle class.”

He’s happy with the new tiers and their restrictions.

“The governor has changed things, so we’re moving in that direction,” he said.

But he said police and firefighters will ultimately be judged by their performance, not their pensions.

“When there’s a fire, we put a piece of apparatus in front of that house in 180 seconds,” he said. “At that point, I’ll tell you, you really don’t care what the pension levels are.”

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September 1, 2013
5:19 a.m.
wmarincic says...

I wish I had a dollar for every time I was with my friend who is a Schenectady Cop and he gets a phone call to come in. We could be out eating dinner with our families and he has to get up and go because of his particular job. If your daughter is being held hostage in a house by a drugged out lunatic with a gun, I doubt you are worried about his overtime.

September 1, 2013
7:35 a.m.
gina99 says...

This Mayor will be judged by his lack of performance. One of many problems he is in denial on.

September 1, 2013
8:13 a.m.
cfield says...

Barbara Blanchard and all the other haters should try to risk their lives for our fellow citizens and then we can talk $$&$. Our Firefighters and cops are worth every penny.

September 1, 2013
10:06 a.m.
mezz3131 says...

First of all, the fire dept has a much better retirement than the police.(based on final single year and extra .6% for every year past their 20) Also, the police don't get more overtime closer to their retirement. It is on a rotating list within each position. Take a look at how many Detectives go back to patrol and get on the same rotating list with the one year rookies. I believe the fire department OT is offered to senior guys first. If it is not in writing then it is just agreed upon by the rank and file. FOIL the numbers for both and see how the OT is distributed. That being said, the department has "reduced staff and cut back on overtime considerably". Has the call volume and crime gone away? Hire more staff, less overtime. It's well know by administrators and city leaders that it's cheaper to hire overtime than hire more staff but they won't admit it publicly. Get tougher on criminals and code enforcement and maybe fire and crime calls will go down...

September 1, 2013
10:22 a.m.
Will1960 says...

Are the Police and Firemen worth gaming the system and the taxpayers to make more money in retirement than when they were employed? There has to be some reforms enacted to prevent this blatant pension padding or Schenectady will end up like Detroit. Unfortunately, no one has the conviction to stand up and take on the unions that benefit from the status quo.

September 1, 2013
10:39 a.m.
reader1 says...

A few facts:

Crime is down and has been going down for the past several years in several major categories. That being said, I don't think any of the administrators would have preferred to reduce their numbers down from almost 170 to approximately 145. But, the budgets are determined by the Mayor and the Council and they base their decisions on what taxpayers can afford.

RE: the overtime - the decision by legislators to allow officers to inflate their pensions was ill advised and short sighted. Having said that, I can understand the logic behind the pension building. Public safety employees leave service typically in their late 40s and mid fifties. Given the average life span of 80 years old, a retiree has about 25 or 30 years to live off the pension (and eventually SSI) - a pension which is eroded annually by inflation. And, they leave government service and enter the job market competing against younger and to many employers more desirable candidates.

The way to address this problem would probably have entailed some adjustment to their ability to build up their investments, and or, training for a post public safety career. But, that didn't happen. And, while the pensions are a tax burden, they were negotiated and are contractual. The manner in which public safety contracts are negotiated needs an overhaul and if done by real experts, the employees, retirees, and taxpayers may very well wind up better off.

September 1, 2013
10:40 a.m.
birmy says...

The math is not explained well. I know that the newest Tier enacted just a couple years ago allows for police and fire to only use 15% of their overtime towards their final average salary which is generally their last 3 years of service. That is simple. If your base salary is $60,000 and you make $25,000 of overtime then only $12,000 of it can be used towards your final average salary.

The Gazette writes but does not cite an example...

"Even the state booklet on the retirement system suggested employees would probably never hit the 20 percent income limits, which stop employees from maxing out their pension with just one year of extreme overtime. 'A 20 percent increase from one year to another is unusual. Therefore, most Tier 1 members are not affected by this limitation,' the booklet said.

I am uncertain what a 20% income limit is? I don't think it means 20% of base pay. Because why would a police officer have a base pay of about $63,800 and then earn $36,200 in overtime and end up with a pension in the 80's? The Gazette could of explained how much of the $36,200 applies to the final average salary for pension purposes. I do not believe the answer is 20% of $63,800.

Then it gets more confusing when you read, "Depending on their tier in the retirement system, they can only increase their salary by 10 to 20 percent each year, so they have to build up overtime pay over the years, pay that could more than double their pension."

I am interested I the Math of it. As far as if the City can afford it is another question.

September 1, 2013
10:41 a.m.
reader1 says...

Pension reform has already occurred to some extent - the new Tier system which limits the amount a pension can be grown. There is still room for improvement.

September 1, 2013
1:22 p.m.
twohands says...

Then we have Schenectady's 'mad bomber' felon who sits in jail collecting a nice check that he managed to inflate by being union and management at the same time!

September 1, 2013
11:13 p.m.
kmiac says...

Kathleen Moore......don't you have anything better to do with your time?? Why must you try and turn everything into a negative when it comes to the fire and police.....god forbid you need them one day! Your writing is terrible, I wouldn't trust you to proof read my 4 year olds alphabet. Get a new gig and start writing about things that matter

September 2, 2013
10:47 a.m.
mezz3131 says...

I have nothing against Councilwoman Barbra Blanchard and I feel sorry that she had a stroke and is disabled and requires caregivers. But I find it funny that she and her husband are bashing the Fire & Police Departments on overtime and pensions when she is taking advantage of the system herself. She has been out disabled for a year or more and has left a vacant council seat that could have a vote. As quoted in Kathleen's article "Blanchard is also receiving pay as a councilwoman until the end of the year, when her term expires. Blanchard, who is now disabled from a stroke, must rely on that money to help pay for caregivers." So what has been said before one should not throw stone at glass houses.

September 2, 2013
10:50 a.m.
wmarincic says...

BTW, this story seems more about Barbara Blanchfield and what she "doesn't get". Ask Barbara how many "shots fired" calls has she been on or how many times has she had to pull a weapon for her protection, maybe you should ask her how many drugged out violent felons she has chased through unlit backyards at 2am. I wish when I retired I got and additional $1000 per month in pension paid by someone else. The only pension I will get is the one that I saved and totally paid for by myself. Stop your whining all of you, you act like little children.

September 2, 2013
10:52 a.m.
mezz3131 says...

A Major Fact: Crime is down? Walk down Becker St., Emmett St., Chrysler Ave and Crane St. area, etc. etc. etc. at night with a couple bucks in your pocket. Or better yet, let your kid ride his/her bike down one of those streets. I don't think so! Truth is, statistics can be deceiving just like politics and newspaper reports.

September 2, 2013
5:17 p.m.
reader1 says...

mezz - Fact - the statistics are generated by the reports done by the police officers. Crime is down in several major categories. Could someone be victimized if they walk down the street at night - sure, but that is two completely separate issues.

September 2, 2013
9:47 p.m.
reader1 says...

Not that I am defending Kathleen Moore, but to say that because the city has been deteriorating then you shouldn't report on other issues doesn't make sense. Clearly, this pension story is not a revelation - the pensions have been an issue for a while. And, the latest news was that the pension payments by the City have decreased. Interestingly, the one point the article makes no one has commented on is that people who are unable to build their pensions are more likely to struggle in retirement. Again - another reason to reform the system.

And, when you talk in glowing terms about the suburbs - keep in mind, were it not for people coning into the city from those prospering areas the drug markets would be a lot less lucrative.

September 3, 2013
7:06 a.m.
mezz3131 says...

Someone should suggest to Barbara Blanchard and her husband that if they need extra cash to apply for a Food Benefit Card and then illegally exchange the food benefits for cash. Kathleen Moore is OK with that. (Clearly the Gazette editor is too).

September 3, 2013
10:28 a.m.
reader1 says...

There are people who game the system but it is hardly accurate to blame the tax burden on people on welfare. Sure, that's part of it - but - certainly not all of it.

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