Mayor Bloomberg wants everybody to think that    New York City  has a $49-billion funding gap in its pension system.   At least that’s what the recent headlines inspired by his administration would have you believe. We can only speculate on his motives for floating that story but a good guess is that he was trying to camouflage the fact that the city’s projected $3.4-billion surplus was now a $5.4-billion surplus, according to the City Comptroller. It’s very hard to plead poverty in contract negotiations with more than $5 billion in your wallet.

In truth, are the city’s pension obligations adequately funded? The short answer is yes. Then how can the mayor suggest that they’re $49 billion short? Only by instructing the city’s Chief Actuary to project what the city’s pension system’s earnings would be if they were converted from stock market investing to a low-risk strategy. Of course, no financial advisor on earth would recommend  long-term investments in low-interest, low -risk strategies because the market has been so lucrative over the long run.

Anyone who knows a little about investments knows that greater risks require greater returns and that there are various degrees of risks and returns to consider. Most of us are familiar with savings accounts at the local bank that pay very little interest. In fact, very often, keeping money in those low-interest accounts proves very costly because the rate of inflation is higher than the rate of return earned on your savings.

Yet, that’s what Bloomberg asked the city’s actuary to consider, knowing it would produce an artificial shortfall for the pension system.

Yet, that’s what Bloomberg asked the city’s actuary to consider, knowing it would produce an artificial shortfall for the pension system.

At this point in history, the city is screaming about pension costs. This has become the rallying cry of many municipal leaders throughout the country who were irresponsible in their spending habits and funding responsibilities. In the case of New York City (and not mentioned in any newspaper), Mayor Giuliani wanted to get the surplus pension funds into his budget as quickly as possible and made very costly deals with the unions to support new pension legislation.

Giuliani left the funding obligation to the next mayor. Once the stock market declined after the World Trade Center attacks, the fallen projected worth of our pension funds required the city to make a large contribution. To sum it up, if Mayor Giuliani hadn’t been so anxious to tap into the fund’s surplus earnings, then Mayor Bloomberg wouldn’t be faced with making larger contributions today. Unfortunately Mayor Bloomberg does not have the intestinal fortitude to blame his predecessor, and so he blames unions and their “pension costs.” He is acting like a spoiled, billionaire robber-baron who wants to steal, through newspaper stories, what the unions and their members have already paid for.

Our members should remember that the market is cyclical and that its current status is that it is on the rise again. This will result in a decrease in the projected funds that the city would have to contribute and create another surplus. Bloomberg and company are looking at a $ 5-billion surplus, and what better way to get that fact off the front pages than to do some silly recalculation of pension funding and blaming the unions for the city’s fiscal problems. Regrettably, it’s something we’ve come to expect from this administration.