Cuomo seeks to curb politics in pension decisions

ALBANY, N.Y. — Attorney General Andrew Cuomo proposed Thursday replacing the elected state comptroller as the sole trustee of New York’s $116 billion public employee pension fund, which serves 1 million members and pays out $7 billion a year.

Cuomo instead wants a board of trustees, headed by the comptroller. That, he said, will eliminate the ability of a company or lobbyist to pay a sole trustee to direct fund investments. Cuomo has been investigating the use of agents and payments to influence the investment decisions by former state Comptroller Alan Hevesi.

Supporters of the current system, less common nationally than the board model, say a single elected comptroller is more accountable to the public than a board of political appointees. The pension system is fully funded and has always met its obligations to pensioners.

Current state Comptroller Thomas DiNapoli said Cuomo’s bill is a good step and in line with reforms undertaken in his office. But he cautions changes must be examined carefully to avoid protracted fights over their constitutionality.

Cuomo, a Democrat, said a sole trustee directing fund investments is like having “a single lock on Fort Knox.” His bill, which has bipartisan legislative support, also strengthens safeguards against conflicts of interest and establishes penalties for violations.

“For decades, the state pension fund has been weakened and corrupted by the sole trustee model,” Cuomo said. “The model has allowed pay-to-play to flourish in a system meant to protect the retirement accounts of thousands of hardworking public employees. To put it simply — the model doesn’t.

DiNapoli, also a Democrat, said the bill would put into law some of the changes he has ordered. He cited his own directives to ban the use of agents and lobbyists in making investments, other actions to curb buying influence, and his decision to limit his campaign contributions to half the legal threshold.

“It’s been a long struggle to repair the damage the Hevesi administration inflicted on the state pension fund,” DiNapoli said.

Hevesi has not been charged in Cuomo’s investigation and has denied any wrongdoing.

On Tuesday, Raymond Harding, the one-time head of New York’s now-defunct Liberal Party, pleaded guilty to securities fraud for accepting kickbacks from investment companies doing business with the pension fund as rewards for political favors to Hevesi.

“Public trust needs to be earned and the pension fund needs to continue to function as effectively as it has,” DiNapoli said. “One million New York retirees and public employees and their families are depending on that. Any discussions must be open, public and inclusive. This bill opens the door on those discussions. The time is right for this debate, so let’s have it.”

John Faso, a former Republican candidate for comptroller and governor, said the proposal would harm the independence and security of the fund and make it more susceptible to political influence.

“Individual comptrollers can be honest or dishonest; boards of trustees are the same,” Faso said.

Under Cuomo’s proposal, the comptroller would be chairman of a 13-member board that would make final investment decisions. The governor, attorney general, Senate president and Assembly speaker, as well as the minority leaders of each house, would appoint members.

The other members would represent constituencies in the pension system, including two active state employees, a retiree, a county employee, a local government employee, and one representative each for firefighters and police officers.