Open Letter to New York Governor Andrew M. Cuomo and New York City Mayor Bill De Blasio

May 5, 2018

Dear Governor Cuomo & Mayor de Blasio:

We are writing to you on behalf of the hundreds of thousands of our members, who are very concerned by your recent calls to divest the state and city’s pension funds from fossil fuels. As you know, 1.2 million state workers and 730,000 active and retired city workers rely on modest, yet steady pension returns to support themselves and their families following a long career of public service. With the Trump Administration’s new tax cuts, which are aimed at economically crippling states like New York, your divestment proposals are playing politics with our retirees’ savings at a time when they can least afford it.

Considering the fact that both of you have publicly championed the rights of New York’s public-sector workers and have vigorously opposed recent efforts, such as the Constitutional Convention, which would have destroyed our pensions and benefits, we are deeply alarmed by your fossil fuel divestment proposals, which cause a great deal of harm to working families, while achieving very little in the fight to combat climate change. Your proposals place a priority of politics over performance and they actually contradict the progressive values both of you hold dear. In fact, they are regressive.

Our members and their families care deeply about the health of the environment and the future of our planet. No reasonable person can argue that man-made climate change is not real. However, we must find productive ways to deal with it to ensure a healthy planet for our children and grandchildren, while not punishing working families at the same time.

Public pensions are a right earned by state and municipal workers and retirees who have devoted much of their lives to protecting and serving the public. They are protected under the New York State constitution and should not be used as policy experiments or part of some broad political agenda.

Unfortunately, that’s precisely what your proposals would do. The Common Retirement Fund of the New York State and Local Retirement System holds $192.4 billion in assets. It represents about 650,000 active state and local employees and 452,000 retirees.

A recent report by Global Analytics Services commissioned by the Suffolk County Association of Municipal Employees found that the fund would lose $188 million to $302 million over five years if forced to divest from fossil fuels — which earn at or above the mandated 8% annual return — and replace them with “green” investments that return 3 percent to 5 percent on average.

Bradley Heinrichs, an actuary who analyzed the report for Global, noted that divesting nearly $1 billion in fossil fuel investments in the state fund into lower-earning securities could force state and local governments to raise taxes or cut vital services to cover these costs. This should sound the alarm for working families across New York.

In New York City, taxpayers’ contributions to the pension funds have climbed steeply from $1.4 billion in fiscal year 2002 to $9.3 billion in fiscal year 2017 as politically motivated investment decisions and poor management have required more taxpayer funding to cover shortfalls. In fact, the city will soon be spending more on pension costs than social services with the exception of education. Divesting $5 billion in fossil fuel investments in the city’s pension fund over the next five years will only leave New York’s taxpayers with a greater financial burden and far less social services that New Yorkers rely upon daily.

New York State Comptroller Tom Di Napoli has wisely resisted politically motivated investment decisions over the years, which is why the Common Retirement Fund has yielded a 10.17% average five-year return and a 7.12% average 10-year return.  He has argued that shareholder engagement, rather than divestment is a much more effective way to influence the behavior of fossil fuel corporations. We agree. And we applaud him for focusing on his fiduciary responsibilities which is to maximize the highest possible returns for the fund’s pensioners and our retirees.

The largest public pension fund in the U.S., the $310 billion California Public Employees’ Retirement System (CalPERS) has rejected a full-scale divestment of fossil fuels, as has the $184.8 billion California State Teachers’ Retirement System (CalSTRS). Both systems favor diversifying their investments to minimize losses and boost returns. We believe New York can learn from its equally progressive counterpart on the west coast.

Responsible pension fund managers understand that the purpose of pensions is to ensure a secure retirement for public workers. These funds were not created for pursuing political agendas or making symbolic statements — however honorable the cause may be. Working families in New Yorker deserve better and we are demanding that you demonstrate the same commitment to protecting our pensions as you have in the past.

Labor always has — and always will — fight for progressive change in this country, even when that means bucking the political tailwinds of the day. Just as public-sector unions launched an aggressive year-long campaign to defeat the proposed Constitutional Convention in November, we will marshal our collective resources in the coming months to educate our members about your risky divestment proposals and the economic threats they pose to all working families and taxpayers in New York.

Sincerely,

Uniformed Fire Alarm Dispatchers Benevolent Association IAFF Local 4959
Subway Surface Supervisors Association
Suffolk County AME
Nassau County Correction Officers’ Benevolent Association
Police Conference of New York

June 5, 2018