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Efforts to obtain St. Clare's pension bailout stalling

Efforts to obtain St. Clare's pension bailout stalling

Legislators say bailout won't be part of state budget as diocese is making no progress on funding
Efforts to obtain St. Clare's pension bailout stalling
The Ellis Medicine McClellan Street Health Center is the former St. Clare's Hospital.
Photographer: Marc Schultz

ALBANY — With only a few days left before a new state fiscal year, it appears increasingly unlikely there will be any money in the state’s 2019-2020 budget to assist 1,100 former employees of St. Clare’s Hospital who saw their pensions reduced or eliminated.

Two state assemblymen who’ve been trying to broker a solution say the effort to obtain state money hasn’t been matched by any attempt to secure funding from a church-affiliated source.

Without that, they say, there is little likelihood of a state bailout for the pensioners of the defunct Schenectady hospital, which was closely connected to the Roman Catholic Diocese of Albany before, during and after its six decades of operation.

Nobody involved — legislators, diocese, pensioners — is giving up, but neither is anyone holding out hope for a near-term solution for those whose retirement income was suddenly reduced.

Assemblyman Phil Steck, D-Colonie, whose district includes the former St. Clare’s campus, said Tuesday: “I think if there’s going to be a fix it’s going to take some time. There’s no way you could get the pieces in place in this budget process.”

He said Albany Bishop Edward Scharfenberger and the diocese have expressed support for a funding solution but neither has shown any visible progress toward being part of one.

“The issue can’t be brought to the forefront, as we’ve explained, until we get a commitment from the Catholic Church.”

Lori Daviero of Amsterdam, a retired St. Clare’s X-ray technician, said the news was disappointing.

“It was another kick in the stomach, for sure,” she said. The diocese also hasn’t responded to inquiries about the followup meeting it said it would have with pensioners, she added.

“We are trying to do that,” Daviero said. “We want all the pensioners there. They limited it to just our committee last time.”

Assemblyman Angelo Santabarbera, D-Rotterdam, had long sought a meeting of pensioners, diocese officials and bipartisan legislators, and finally succeeded in brokering one in February. The strategy agreed on, he said afterward, was that legislators and the diocese each would seek part of the funding for a bailout of the pension fund.

The legislators followed through, but there’s been no progress reported by the diocese, he said Tuesday.

“It’s a little discouraging to see that,” Santabarbara said. “It makes it that much harder for us as legislators.”

As the March 31 budget deadline nears, he holds out some hope for an allocation of funds conditioned on other things happening first — not a bailout, but money set aside for a bailout, should the conditions become right for one.

“We have six days to go — that’s a lifetime up here at budget time.”

The diocese, using gradually more compassionate language in written statements, has denied responsibility for creating the pension fund crisis or for fixing it. Scharfenberger has declined direct comment and barred journalists from his two meetings with pensioners. 

On Tuesday, the diocese released a statement that again identified no source of funding: “Bishop Scharfenberger continues to pursue all avenues with regard to possible funding to assist St. Clare’s retirees in some way. It’s an ongoing process.”

State Sen. James Tedisco, R-Glenville, whose district includes the old St. Clare’s campus, now part of Ellis Medicine, also has been trying to obtain relief for the pensioners. But unlike Santabarbara and Steck, he’s in the minority party in his house of the Legislature, and has little influence on budget allocations for a potential pension bailout.

He’s been seeking answers about what happened to the first state bailout of St. Clare’s Hospital pension fund — $28.5 million as part of the state-ordered closure in 2008 of the Schenectady hospital, which suffered chronic financial troubles as a safety-net hospital serving the uninsured and underinsured.

Tedisco’s request for an investigation was rejected by the state Comptroller’s Office on Feb. 14 and the state Attorney General’s Office on March 13.

Tedisco said Tuesday via email: “It’s becoming more and more remarkable and disconcerting that the highest-ranking statewide elected officials, governor, comptroller and attorney general, all who have investigative or subpoena powers as well as representing the 1,100 St. Clare’s Hospital workers whose pensions have been threatened, have refused to work together to find the cause of their pension insolvency or a way to move forward for pensioners.

“Why they are failing to intervene on behalf of these health care workers to find the cause(s) of the pension system failure is suspicious as to what they fear they may find and suggests a potential inconvenience of facts!” 

Steck notes that the St. Clare’s pension fund was woefully underfunded — hospital management put no money into it in seven of the final 10 years and nearly no money the eighth year. (As a church-affiliated organization, the hospital used an exemption to opt out of the federal pension guaranty program that would have provided its retirees a safety net.)

The state, Steck said, was not obligated to bail out the fund in 2008, and the fact that the bailout money was invested and soon shrank in the Great Recession doesn’t obligate the state to do a second bailout now.

The Catholic Church or the diocese, he believes, needs to commit to a direct financial role in the bailout for the state to even consider providing more funds. One potential source of cash for the diocese, which has said it lacks the necessary funds itself, is 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. 

“Assemblyman Santabarbara and I have a letter going to the Cabrini Foundation and we’ll see where that takes us,” Steck said.

Compounding the problem, Santabarbara said, is that the sum needed for a full bailout — to restore full pension payments promised to all 1,100 St. Clare’s pensioners — is apparently one-third more than initially thought: $56.5 million, rather than $42 million.

As a bailout is sought, efforts continue on another front: Legal Aid attorney Victoria Esposito is representing two of the retirees in an attempt to obtain relief. Any victory would apply only to those two, but could provide a precedent for the others, she has said.

She said on Tuesday that they had paused in hopes that litigation would not be necessary, but there has been little to no progress after the bishop met with pensioners in December, then met with pensioners and legislators in February.

“While we had hoped this could be resolved without litigation, we have continued to prepare for litigation throughout this period and will be ready to move forward in court should that become necessary,” Esposito said.

Meanwhile, the successor entity to St. Clare’s Hospital — St. Clare’s Corporation — issued a statement Tuesday indicating it had filed court papers seeking to dissolve.
Corporation President Joseph Pofit had said in February that this would be its next step — after overseeing termination of the pension plan, it had no reason to continue to exist. 

Federal disclosure forms filed by St. Clare's Corp. showed a gradually diminishing cash reserve in recent years. In November, Pofit told The Daily Gazette the money came from historical reserves and a Medicare settlement, and was being used for ordinary fees and expenses. It was down to about $700,000 at that point, he said. Enough money would be set aside to fund corporate disolution, he said, and the remainder placed in the pension fund.

In one of its final acts, the corporation disposed of those remaining assets: $51,100 went to Catholic Charities of the Albany Diocese to be used to aid St. Clare’s pensioners and $505,000 went to the pension fund, which is administered by Prudential.

In an emailed statement Tuesday, it said: “St. Clare’s Corporation is aware of and supports community efforts to identify other sources of funding to help St. Clare’s retirees. If such funding is secured, it would be disbursed by another entity or entities.”

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