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State legislators call for St. Clare's pension solution

State legislators call for St. Clare's pension solution

State rejects call for bailout, says mismanagement is 'moral responsibility' of diocese
State legislators call for St. Clare's pension solution
The entrance to the former St. Clare's Hospital is pictured.
Photographer: Marc Schultz

SCHENECTADY — All four state legislators representing Schenectady are supporting efforts to restore pension payments for former employees of the defunct St. Clare’s Hospital.

While the suggested means of this assistance vary — a state-funded bailout, an infusion of cash from the Catholic church, a collaborative search to find a solution — all four say the 1,100-plus ex-employees of the Schenectady hospital should not suffer the effects of events beyond their control:

  • Assemblyman Angelo Santabarbara, D-Rotterdam, came out early last week and urged the Roman Catholic Diocese of Albany and the state to join to “do the right thing” for the retirees.
  • State Sens. George Amedore, R-Rotterdam, and James Tedisco, R-Glenville, on Monday called for the state to pay more than $50 million to make the pensioners whole, on the grounds that the state ordered the shutdown of the financially troubled hospital and so bears responsibility for it.
  • Assemblyman Phil Steck, D-Colonie, said Monday the state and a philanthropic fund associated with New York Catholic dioceses should split the cost of a pension bailout.

All four legislators suggested that the state Comptroller’s Office investigate the problem and monitor or administer the solution.

NO AGREEMENT

The response Monday was underwhelming.

The Roman Catholic Diocese of Albany and the state Department of Health in the past have rejected responsibility for causing or fixing the  pension deficit, and neither changed their stance Monday.

The diocese said in a statement: “While we can’t comment on any individual suggestions, Bishop Scharfenberger has offered to facilitate discussions among all of the stakeholders so that everyone can be heard and all ideas and potential remedies can be surfaced.”

The Health Department said in a statement: “The mismanagement of the pension fund is the moral responsibility of the diocese, and they should fund their fair share.”

Nonetheless, St. Clare’s retiree Lori Daviero, an organizer of the St. Clare’s pensioners, saw the legislators’ support as a promising sign.

The group has gained public support amid reports of their plight in The Daily Gazette and other traditional media outlets, as well as through social media and group meetings. Its online petition drive had surpassed 3,700 signatures by Monday evening.

“We are excited and elated that the senators are backing us up, that’s for sure,” Daviero said Monday. “Hopefully we’ll get some more support that way, too.”

Daviero said she’s heard that Tedisco has responded to every one of the pensioners who has reached out to his office.

Clearly, the desire to fix the crisis is present. The money … not so much.

CRISIS EVOLVES

St. Clare’s Hospital, struggling with its finances, paid little or nothing into its pension fund in each of its last 10 years of operation. It surrendered its operating license in 2008. 

Along the way, St. Clare’s also made a decision that has come back to haunt its ex-employees: It decided to take advantage of an exemption for religious-affiliated organizations and stop paying into the federal pension insurance system. This saved the hospital money but left its future pension recipients with no safety net in the event the pension fund ran out of money.

The state Berger Commission merged or shut down St. Clare’s and numerous other hospitals statewide in the mid-2000s. The state provided $50 million to help Ellis Hospital absorb St. Clare’s and become what is now Ellis Medicine. A full $28.5 million of that money  was placed in the St. Clare’s pension fund. This proved to be insufficient, at least in part because the Great Recession soon devalued the fund’s investments.

The state Department of Health in its statement Monday stressed these factors: “Unlike others, the owners of this hospital specifically chose not to contribute to the pension guarantee fund on behalf of its workers. The state stepped in to help salvage workers’ retirement and contributed $50 million with $28.5 million earmarked to support the workers’ pension liabilities. The mismanagement of the pension fund is the moral responsibility of the [Albany Roman Catholic] Diocese, and they should fund their fair share.”

Today, the pension fund holds $29 million in assets and has an estimated liability of $68.7 million to former employees. To make the money last longer, the St. Clare’s Corporation is reducing the amount of the monthly checks paid to 443 retirees by about 30 percent and canceling checks to about 661 younger ex-employees altogether.

SUGGESTED ACTIONS

Santabarbara said Monday that the crisis has multiple causes and will need the collaborative efforts of multiple stakeholders to fix. (The Albany diocese and the St. Clare’s Corporation have each indicated willingness to meet with pensioners to seek a solution.)

Santabarbara criticized the sudden notice given to the ex-St. Clare’s employees, many of whom are on fixed incomes and beyond the age where they can easily get a job to replace lost income.

“We cannot let these employees be left out in the cold like this,” he said. “It’s simply unacceptable.”

Steck, like a number of the retirees, sees a potential solution in the Mother Cabrini Health Foundation, a $3.2 billion philanthropic foundation set up this year with the proceeds of the sale of Fidelis Care by the Catholic Church in New York. 

“I certainly think it’s reasonable to have a significant portion of what’s needed to fund that pension plan to come from that source,” he said. To demand the state pay the entire pension bailout is unreasonable, in his opinion, because the state already made that major contribution in 2008 and it was not obligated to do that.

“We need to see if we can get the Roman Catholic Church to also contribute to this resolution,” Steck said. “I think we have a responsibility to both the employees of St. Clare’s but also to the state to do this the right way.”

The Albany Diocese was closely associated with St. Clare’s from before its opening to after its closure but maintains that it was only affiliated. There was no official connection, it has said; there was no diocese ownership or operation of the hospital.

Tedisco and Amedore blame the state for the pension crisis, saying the state ordered the closure of St. Clare’s and left its employees in the lurch despite knowing how deeply troubled the hospital’s finances were in 2008.

They wrote to Monday to Gov. Andrew Cuomo urging $53.5 million be included in the 2019-2020 budget to rectify the matter, pending an audit by the state comptroller. If the state can afford a $1.7 billion subsidy for Amazon to build offices in Queens, Tedisco said, “I certainly think we can afford to provide the pension to these health care professionals.”

CARE FOR THE POOR

A root cause of the problem for St. Clare’s is that a large percentage of its patients were uninsured or underinsured and didn’t pay their bills. The hospital was, in effect, a safety net for the poorer side of Schenectady.

Tedisco counted himself among that population when he was a child, the son of a GE forge operator and a homemaker who couldn’t always put much real food in the refrigerator.

He found himself in the St. Clare’s emergency room a number of times growing up, once for a broken collarbone in first grade, later for a dozen stitches when horseplay with a golf club went awry.

Many ex-St. Clare’s employees now look back at serving that poorer population as a fringe benefit for paychecks that were not at the top of the industry pay scale. Tedisco, who once was on the receiving end of their care, vouched for the benefit the hospital and its employees had on the community.

“I don’t think their contribution could be measured by any amount of money,” he said.

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