New York City is reeling from a $500 million underestimate of the cost of its pension system. How did it happen? It turns out that the actuary used by the New York Legislature was paid by the unions:
An actuary paid by public employee unions and yet relied upon by the State Legislature to determine the cost of proposals affecting New York City’s pension system underestimated their ultimate cost by at least $500 million, city documents and other records show.
In the hundreds of bills for which he has provided estimates to lawmakers since 2000, the actuary, Jonathan Schwartz, said legislation adjusting the pensions of public employees would have no cost, or limited cost, to the city. But just 11 of the more than 50 bills vetted by Mr. Schwartz that have become law since 2000 will result in the $500 million in eventual costs, or more than $60 million annually. . .
Mr. North and other city employees made the calculations on the 11 bills when they were before the Legislature, but for the other bills, no alternative to Mr. Schwartz’s projections could be found. The New York Times reported last month that in an arrangement that had not been publicly disclosed, Mr. Schwartz was being paid by labor unions. He acknowledged in an interview that he skewed his work to favor the public employees, calling his job “a step above voodoo.”
This is classic rent-seeking behavior by the unions, which is to say, theft. And for $500 million, whatever they paid Schwartz is a bargain. There’s no mention that anyone will be prosecuted, in case you were wondering.
(Via Asymmetrical Information, via Instapundit.)