CM Restler questions OMB on pension amortization risks and bond rating

Thank you, Chair, and good afternoon.

Good afternoon.

I have a question about pension amortization.

The state budget included a provision that will push off or re-amortize some required pension payments over the next five years, the unfunded accrued liability.

While the maneuver is estimated to generate as much as $2.2 billion in the short term, it could cost an additional $7.6 billion over the next 10 years.

Additionally, changes the state made to improve pensions for workers in Tier 6 is estimated to cost another $1.4 billion.

Over the same period.

What are the administration's next step towards pension amortization and what is left to be negotiated with the municipal unions?

And how will the city, how does the city plan to close bigger gaps in the out years?

Of the financial plan owing to this amortization?

And do you believe that there are any risks to the city's bond rating as a result of the amortization?

Sure, so thank you for your questions, Council Member.

The

Amortization, as I noted in my testimony, is a prudent way to pay down what is a long-term debt obligation by flat level dollar payments.

The figure you cited about the $7.6 billion cost over the plan, that is for all employers in the pension systems.

It's not only the city of New York, it's the MTA, it's health and hospitals, it's NYCHA.

There are different employers that participate.

So the cost over time to the city would be $5 billion.

But the savings as well for the short-term fiscal stability is...

is also significant as well.

In terms of the status, the state law requires that it be approved by the boards of trustees of each of the systems.

We are pleased to report that the Board of Education Retirement System has approved.

We know that the NICER's board is coming up on Thursday, and then the other boards will come up for the remainder of the month.

So we look forward to seeing those votes approved by the boards of trustees to actually effectuate the proposal.

In terms of the rating agencies, we've been in constant contact with the rating agencies, as we do after we release every plan.

So I've met with the four rating agencies last week.

And we had a very positive discussion on what this proposal does.

And we talked about the fact that it was level dollar, flat dollar.

And we talked about the funded ratio for each of the pension systems.

New York City's five systems at 86% versus the national average at 79%.

Thank you.

Thank you.

Okay, Councilmember Ressler.