Wednesday, April 13, 2011

Christine Quinn dips into Retiree Trust Fund for City Employees

From Crains :

Council eyes trust-fund raid; watchdog barks

The City Council wants to dip further into a trust fund created for retired city employees so it can stave off “decimating” cuts to education, social services and public safety.

In its response Friday to Mayor Mike Bloomberg's preliminary 2012 budget, the council wrote that it would not seek to raise taxes or cut capital spending but would instead set its sights on a one-shot.

“We must give consideration to a measured additional use of the Retiree Health Benefit Trust Fund,” the council wrote, referring to the account it helped create in 2007. The fund was designed to offset the ever-expanding unfunded liability created by covering retirees' health care.

The city stashed $2.5 billion of surplus in the fund during its first two years, but it has since siphoned money from it to close budget deficits. The mayor will draw down $395 million from the fund this year and $672 million next year, according to the Independent Budget Office.

The council has now signaled its apparent desire to use even more money from the fund to pay for programs that would otherwise be lost. But one watchdog group growled at the idea.

The Citizens Budget Commission, which tracks the city's finances, has urged the council on multiple occasions not to raid the fund. “This is not a rainy-day fund,” said Maria Doulis, an analyst with the group. “It's not a surplus fund. It was established to fund retiree benefits.”

Doulis added, “The council is not using this money for its intended purpose.” The mayor has used the trust fund to pay pension expenses, which arguably also stretches the defined purpose of the fund.

A spokeswoman for Council Speaker Christine Quinn would not comment further on the council's plans for the fund, or say how much additional money it might seek to take from it.

As of June 2010, the unfunded liability of retiree health care was $70 billion, according to the commission.

1 comment:

  1. Christine Quinn treats the retiree fund like it is just another slush fund.