Soaking the Retired

NYS

When Andrew Cuomo was campaigning for governor of New York he promised that, if elected, he would not raise taxes. He would cut services and fund state programs only existing tax revenue.

He hasn’t entirely kept that promise as governor, but he’s done a pretty good job being creative with what he’s got. Part of this plan, however, apparently means giving state (or state-affiliated) employees reduced benefits and making them pay more out of pocket. Those connected to the state universities object.

According to an article by Cara Matthews in The Journal News:

United University Professions, which represents 35,000 academic and professional faculty on 29 State University of New York state-operated campuses, announced this afternoon that it is suing the state over an extra 2 percent hike in health-insurance rates for nearly 4,000 retirees. The union filed the lawsuit in federal court in Albany today and seeks a reversal of the hikes.

The union is charging that the state violated a federal law that prohibits states from impairing contracts. The lawsuit claims the action was “arbitrary and capricious” on the grounds that the state “extended a change intended for retirees not covered by a union contract. UUP’s retirees have contractual protection.”

The legal distinction here is perhaps debatable. The union may be part of the lawsuit, but the rate hike in question actually comes as a result of an agreement reached by the unions with the state government. Starting in October retirees enrolled in the state’s Empire Plan began paying 12 percent and 27 percent of the premium costs (depending on their pay grade). They had earlier paid 10 and 25 percent.

Apparently the last time the union agreed to contribution changes, in the 1980s, the rates applied only to future retirees. Those employees already retired were allowed to pay the earlier rate. In this case, however, the Cuomo administration simply extended the new rate to those already retired.

That’s certainly very unfair to retired employees, but it’s not clear that the rate hikes are actually illegal. And the change certainly isn’t “arbitrary and capricious.” It’s actually very strategic, from the state’s perspective.

New York will save $19.8 million as a result of the rate hikes. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer