Bishop, lawmakers, St. Clare’s retirees meet on pension crisis

No funding seen yet but cautious optimism as strategy is agreed on
Entrance to Ellis Medicine McClellan Street Health Center which was St. Clare's Hospital.
Entrance to Ellis Medicine McClellan Street Health Center which was St. Clare's Hospital.

ALBANY — Capital Region legislators and the leader of the Albany Catholic Diocese appear to have agreed on a strategy to seek relief for 1,100 former St. Clare’s Hospital employees whose pensions have been reduced or eliminated.

The parties described their meeting Friday as productive and a significant step forward. They said a bipartisan group of lawmakers in both houses of the state Legislature will seek $20 million in assistance in the 2019-2020 state budget to close a pension shortfall that is estimated at $42 million. Multiple attendees said that Bishop Edward Scharfenberger agreed to help look for the other $20 million.

The news media was barred from Friday’s meeting, but legislators and pensioners spoke to The Daily Gazette afterward, and the diocese provided a written statement.

“When I think of where we started, and when I look at the people gathered in that room today, you can’t call it anything but progress,” said Ceil Mack, who has lost a portion of the pension she earned working at St. Clare’s from 1979 until it ceased operation in 2008.

“While the approach might differ, there was no doubt when you walked out of that room that everyone is intent on finding a real solution.”

The pension crisis was decades in the making, and the financial problems that caused it were known. But it came to a head with unexpected suddenness in autumn 2018, when 1,100 former employees were advised they’d see their monthly pension payments reduced or eliminated in just a few months rather than several years in the future, as previously indicated. There was no safety net, as the hospital legally opted out of the federal Pension Benefit Guaranty Corporation in the 1990s.

In November, Assemblyman Angelo Santabarbara, D-Rotterdam, called for all parties to meet and find a solution, since no single party — pensioners, legislators or diocese — was likely to solve the pension crisis alone.

The bishop met with pensioners in December, and pensioners met with local lawmakers in January, but it took Santabarbara’s staff three attempts to bring everyone to the table together.

“It took a little while to get to this point but we made it happen today,” Santabarbara said Friday. “We had a conversation on the ongoing crisis and we talked about some solutions going forward.

“As I said all the way along, the solution involves collaborative effort — there’s no one party.”

Also attending were Assembly members John McDonald III, D-Cohoes, Phil Steck, D-Colonie, and Mary Beth Walsh, R-Ballston; senators George Amedore, R-Rotterdam, and James Tedisco, R-Glenville; Scharfenberger; and staff members for state Sen. Neil Breslin, D-Albany, and Assemblywoman Pat Fahy, D-Albany.

Scharfenberger, described by some attendees as compassionate and gracious, released a statement afterward that was flush with optimism but short on details and bare of any commitment for the diocese to provide any funding. (The diocese has maintained all along that it never owned the hospital, did not cause its pension problems and is not responsible or able to fix them; others say the diocese has a moral if not legal responsibility due to its very long, very close association with the Schenectady hospital.)

“We are continuing our collaboration with community leaders to do whatever we can to help the good people who served St. Clare’s Hospital,” Scharfenberger’s statement read. “It was a very positive meeting and a necessary next step in seeking a solution to this pension crisis.”

Santabarbara and pensioner Mary Hartshorne of Mariaville said the bishop agreed to investigate the possibility of seeking a $20 million bailout from the Mother Cabrini Health Foundation, a $3.2 billion philanthropic organization set up last year with the proceeds of the sale of Fidelis Care by the Catholic Church in New York. 

Santabarbara said the bishop also agreed to attempt to bring representatives of Cabrini and Prudential, the pension fund manager, to a future meeting with pensioners.

Steck and Tedisco, whose districts include the old St. Clare’s Hospital (now used for other medical purposes as part of Ellis Medicine) saw reasons for both optimism and tempered expectations at Friday’s meeting.

“I thought it was a very constructive meeting,” Steck said. All parties are working toward a solution, and “Again, that’s certainly our goal but making it come to pass depends on a lot of moving parts.”

Tedisco said: “I think we made some progress — we had all the local elected officials.”

A fundamental problem is that the actual sum needed to bail out the pension fund isn’t even known, he said. There’s also the issue of the state’s newly discovered budget deficit and the possible reluctance of state leaders to set a precedent for future pension bailouts. 

“I’m just concerned in the budget process that they’ll use that as an excuse not to cough up,” said Tedisco, adding that he would consider such an excuse bogus. 

The state, he said, has bailed out other entities in the past and is proposing $3 billion in state and city incentives to get Amazon to locate an office in Queens. So it certainly can help 1,100 people who ran a hospital of last resort for Schenectady’s uninsured and underinsured population, he said. “They couldn’t prepare for the rug being pulled out from under them,” he added.

The state Department of Health has rejected a new St. Clare’s pension bailout — it provided $28.5 million for that purpose as part of the closure process in 2008, though that sum apparently was insufficient, and then shrank amid the Great Recession.

Whether an audit of what happened to the first state bailout would be required as a condition of a second bailout is unknown but it should be done, Santabarbara said. 

“That is a question that does have to be answered,” he said, but there is not time for it now: The chance to get state dollars secured for the next 12 months is rapidly evaporating.

“The other part of this, of course, is that there are at least 600 pensioners that have stopped getting payments at this point,” he said. “So time is of the essence.

“In advocating for this, my job is to get people to understand how important this is — it’s literally turning people’s lives upside down. That’s the message I’ll be delivering up at the Capitol.”

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