If yesterday’s deal to re-jigger the city’s behemoth pension funds manages to limit City Comptroller John Liu’s access to them — even just a little — that alone will be a huge comfort to New Yorkers.
There’s also reason to hope for sizable savings for taxpayers, as Mayor Bloomberg suggested, by folding the city’s five pension boards into just one — and having it pick an “independent” manager to oversee the funds’ investments, as the proposal seeks.
But there are also grounds for fear.
And reason to think the heart of the problem — exploding pension benefits — will be left to careen out of control.
Let’s face it: At the end of the day, the success of this $120 billion experiment will have to be measured by results.
In dollars.
Yes, the proposed changes are significant:
* A single board chosen by the mayor, comptroller and municipal labor unions, who represent pensioners, would set broad investment policy for the funds’ combined $120 billion in assets.
* The board would hire a chief investment officer to handle daily management of the funds; right now, the comptroller — Liu — picks that person.
* Liu would lose his investment staff, known as the Bureau of Asset Management, which would become (supposedly) an “independent investment entity.”
The goal?
* To “de-politicize” decisions by taking them away from, well, guys like Liu — a likely mayoral candidate and one of the most political (and radical) players in town — and the five labor-heavy boards that now set policy.
* To streamline oversight of the five funds — board members would shrink from 58 to just 12 — to spread the overhead and take advantage of economies of scale.
These measures, supporters say, will lead to bigger returns — meaning city taxpayers would have to pony up less each year to cover promised benefits to retirees.
All of which sounds fine. In theory.
Problem is, creating a central board creates the opportunity for errors — and intentional mischief — to be magnified.
More troubling, the plan aims to pick low-hanging fruit — actually, a low-hanging berry — while ignoring the chief driver of city pension costs: runaway benefits.
A decade ago, the city devoted less than $2 billion of its precious tax revenue to retirees; this year, the figure is soaring past the $8 billion mark. Meaning less money for cops, firefighters, schools, etc.
Thank generous pension rules — created by labor-loving lawmakers — for that.
Until that problem’s fixed, well … don’t expect that low-hanging berry to go far.