SPECIAL REPORT: POLICE PENSIONS
Overtime pays big dividends when some WNY police officers retire
Top earners among department retirees get there by boosting salary in final years
Patrick McDonald keeps setting records. When last heard from, the 59-year-old police officer had accumulated more than $123,000 in overtime last year, and his $189,000 in total earnings was a record high for the Buffalo Police Department. Now, McDonald’s pension is record setting, too.
At $105,361 annually, McDonald’s pension is not only the highest of any retired police officer in Buffalo, it’s also among the highest — possibly the highest — pensions of any municipal employee in all of Western New York.
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And it’s nearly twice the $58,000 base pay McDonald earned as a police officer.
“This is unusual,” said Edmund J. McMahon, director of the Empire Center for New York State Policy, a branch of the conservative Manhattan Institute think tank. “I doubt you’ll find many places where a pension is bigger than the base.”
In a continuing look at taxpayer-financed pensions, The Buffalo News today examines police pensions, which are typically the most costly to communities because of the enhanced benefits police as well as paid firefighters receive compared with other public employees.
The News found several officers taking advantage of the pension system — with the blessing of town, village and city leaders who negotiated contracts and other agreements that allowed the officers to pump up their final paychecks with overtime.
The result is that some area police officers in the city and suburbs get pensions that are similar to what retired State Supreme Court judges receive.
Many local retired police are receiving retirement pensions roughly equal — and sometimes bigger than — the paychecks they earned while working.
And a couple of retired officers — including McDonald — are getting pensions that exceed former Gov. George E. Pataki’s.
McDonald’s pension is so high partly because he remained on the job for almost 42 years. But the overtime Mc- Donald received in the final year of his career — combined with a perk that only Buffalo’s most senior police officers receive — are the biggest reasons.
When McDonald joined the force in 1966, police and firefighters had the option of basing their pensions on their final year’s earnings, or the average of three consecutive years’ pay — whichever is higher.
In McDonald’s case, his pension is based on the one-year plan. If his pension were based on a three-year average, it would be about $89,000, according to Buffalo News calculations.
Buffalo no longer offers the more-lucrative one-year pension option when it hires officers, and just 21 city officers on the force still qualify for it.
But some suburban Buffalo communities, including Amherst, Town of Tonawanda and Cheektowaga, do offer the one-year perk to all their officers, from veterans to rookies.
And it’s apparent in the suburban pensions.
The average pension among retired police in these suburbs — where base salaries are slightly higher than those in the city — is about $13,000 more than the average Buffalo police officer’s pension, a Buffalo News analysis found.
“Opting into a one-year plan makes no sense at all,” McMahon said. “It’s totally unjustifiable for a locality to opt into a needlessly enriched plan. “
Formula pays off
The Buffalo News obtained retirement and payroll information from the Buffalo, Hamburg, Tonawanda, Cheektowaga and Amherst police departments, and statewide pension data from the state comptroller’s office.
A review of this information found:
• Twenty-five percent of 50 Buffalo police officers who retired from January 2007 to May 2008 increased their salary in the final years of their employment to more than $100,000.
• The average pension among the 50 retired Buffalo police officers was $48,000, but of those whose salary topped $100,000 in the three years before retirement, the average pension was $67,600, The News found.
• The average pension among 19 suburban police officers who retired since January 2007 from Cheektowaga, Tonawanda and Amherst departments was $60,500. Pension figures for the one Hamburg police officer who retired in that period have not yet been calculated by the state.
• Whether city or suburban, officers retiring under the one-year plan typically received higher pensions than those using the three-year average. About 40 percent of the suburban retirees and 80 percent of the city retirees who qualify under the one-year plan have pensions that equal or exceed their regular pay. No Buffalo officers excluded from the one-year plan do, although several come close.
• Many suburban police officers — including the police chiefs — get golden parachutes when they retire, taking advantage of sick leave and vacation buyback provisions to boost their final year’s pay to more than $150,000. In the case of two chiefs who retired, it was $200,000.
Buffalo doesn’t provide these types of benefits, and these buybacks are not used in pension calculations. Nonetheless, some suburban police chiefs model their final year on the force after the rank and file, using overtime or whatever else is available to boost their pensions.
Special treatment
Police defend their overtime-enhanced pensions, saying they work hard for their money and deserve to retire on a livable pension after a career that involves putting their lives on the line.
“No one is giving them anything for free,” said Buffalo Police Benevolent Association President Robert Meegan. “They are still there on the corner with a gun on their hip, ready to do battle with the bad guys.”
“We have a highly qualified, trained and educated police force,” said Detective Edward Guzdek, head of the Amherst police union. “Look at the work they do, and the hours they work. We don’t have gratuitous overtime.”
Police also said that, given the size of the state pension system, and the way the state invests pension funds, individual pensions don’t affect the costs for the city or town that employs an officer.
But state pension funds in New York are invested in the stock market, so when the market tanks, as it recently has, pension costs to taxpayers increase. That’s the main reason pension costs skyrocketed this year.
Regardless of whether the market is weak or strong, police and paid firefighters get special treatment in the state retirement system.
Police as well as paid firefighters retire at 50 percent of their final year, or average of three-year, earnings after 20 years on the job. The percent increases to 70 percent after 32 years on the job. In addition to being the only public employees offered a one-year pension formula, police and paid firefighters do not contribute to the pension system as many public employees do, and police and firefighters are allowed to retire after 20 to 25 years of service, regardless of age, without any of the early- retirement penalties required of other public employees in New York.
As a result, while school districts, for example, currently pay about 8 percent of their teacher payroll to finance teacher pensions, municipalities pay as much as 16 percent to 18 percent of their police payroll to finance police pensions. Sometimes it’s higher.
The 25 municipalities, for example, that opted to expand the one-year plan to all their police and paid firefighters — not just Tier 1 employees hired before July 1973 — pay a surcharge to the state.
These communities include Amherst, Cheektowaga, Eden, Lancaster, Orchard Park, North Tonawanda and Town of Tonawanda.
Cheektowaga pays an extra $214,000 annually into the pension system so all of its officers can receive the one-year pension-inflating option.
The Town of Tonawanda pegs its extra costs at $192,000 a year.
Amherst pays about $325,000 a year. In addition, because Amherst is relatively new to the plan, it is also paying off $3.2 million in “catch-up” costs the program carries for the town, said Town Comptroller Darlene Carroll.
Tonawanda and Cheektowaga already had the one-year pension benefit when Amherst police asked for it, and got it, during contract negotiations in 2003, according to union officials.
“It was an option for retirement some of our guys wanted,” so the union accepted a lower raise in exchange for the benefit, Guzdek said, adding: “We don’t see it as a huge factor [in pension payments].”
But in fact, the one-year formula generally increases pensions as well as pension costs.
Add it all up
Thirteen Amherst police officers, in addition to the chief, retired from the Amherst Police Department in 2007.
Nine of the 13 earned at least $15,000 in overtime in their final year on the job, with six earning more than $20,000. The average pension for the 13 was $63,000 — slightly less than their average base pay.
The highest pension among the 13 goes to Lt. John P. Storfer.
After 33 years with the department, Storfer received $158,116 during his final 12 months on the job; more than $40,000 of that was for cashing in unused sick time. The sick time buyback didn’t go toward Storfer’s pension, but the $23,000 in overtime he a ccumulated in his final year on the job did. That’s almost a tenfold increase in overtime compared to the $2,300 in overtime Storfer earned two years earlier.
In the end, Storfer retired with a $74,180 annual pension for a job with a base salary of $71,471.
Amherst, Guzdek noted, issues police overtime on a wheel, with each officer getting a turn.
Buffalo, on the other hand, distributes overtime based on seniority, allowing a small group of officers to get the bulk of overtime offered.
Of the 50 police officers in Buffalo who retired since last year, 16 earned $15,000 or more in overtime in a single year during the final years of their careers, and 12 increased their income to more than $100,000 in a single year.
But 39 of those officers are covered under a pension plan that is based on a three-year average. The three-year average of overtime earnings for the 39 officers was about $6,000, although five had a three-year average of $15,000 or more, including two with an average of more than $25,000.
The other 11 retirees — those who qualify for one-year pensions — included seven who boosted their income by more than $10,000 in a single year, with three pumping their pay up by more than $50,000.
There were nine Buffalo officers who retired since 2007 with pensions equal to or exceeding their base pay. All were hired before July 1973 and qualified for the one-year pension plan. Among them is McDonald.
One-year payoff
McDonald, who joined the police department in 1966, became a prime example of added overtime in 2007, when The News reported that the Central District officer increased his $58,000 base pay to $189,000 — thanks in large part to his record $123,000 in overtime.
Usually assigned to the 6 a. m. to 4 p. m. shift, McDonald worked an average of 92 hours a week in 2007 — the equivalent of 13 hours a day, every day of the year, The News found.
McDonald’s colleagues said he worked 363 days in 2007, and typically was assigned to special events, or to fill in when other officers were out sick. He rarely made any arrests but, they said, he issued a fair amount of traffic tickes.
When McDonald retired on April 1, 2008, police administrators speculated he would be the first on the force to receive a $100,000 pension. But it wasn’t until this month that the state comptroller’s office finalized Mcdonald’s pension payments.
Based on his final year earnings, the state determined that McDonald qualifies for a $105,361 pension.
McDonald has previously declined to comment on his overtime, and did not respond to a request by The News for an interview for this article.
While his pension is the biggest in the Buffalo Police Department, he wasn’t the first among rank-and-file officers to take every bit of overtime available to him in his final year.
Officer Michael D. Costello, who retired four months before McDonald and also worked in the Central District, added $71,000 in overtime during his final year, raising his final year salary to $140,000.
Costello also qualified for the one-year pension program, and received an $89,910 annual pension for a job that pays a $59,000 base salary.
Not that the one-year plan is the only way to get a hefty pension in the Buffalo Police Department — especially for an officer with lots of seniority.
Detective Sgt. Patrick C. Murphy, who was hired in 1971, also qualified for the one-year plan when he retired in 2006. But when his pension was calculated, it turned out he benefited more from the three-year calculation. So his $80,845 pension was based on his final three years with the department.
Looking toward the future, the city’s recent payroll figures indicate that the situation is continuing. Fifteen Buffalo police and firefighters still working with the city earned more than $140,000 — thanks in large part to overtime — in the 2007-08 fiscal year that ended June 30.
“The system creates this incentive,” McMahon said. “It presents overwhelming temptations for people to abuse it.”
This two-day series is part of an occasional series on the state’s public pension system. Monday: Some police chiefs pump up their pensions, too.
e-mail: sschulman@buffnews.com
