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Comptroller’s Office disputes MMH assertion that pension costs rising

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MASSENA - Pension costs are one of the driving factors in Massena Memorial Hospital’s plan to convert to a not-for-profit facility, with hospital officials saying the costs are rising enough to bankrupt them by 2017 if they maintained the status quo.

But those costs are actually scheduled to decrease in the next couple of years, according to the state Comptroller’s Office.

Massena Memorial Hospital Chief Executive Officer Charles F. Fahd II said during a recent public information meeting that their budget would be strained by rise in pension costs. He said their 2014 contribution will be $4.2 million. They had paid approximately $125,000 in 2002.

“The pension is certainly the most important. If we continue down this path, the hospital will not have sufficient funds to operate in 2017,” Mr. Fahd said during the meeting.

Lloyd Arakelian, a certified public accountant with Freed Maxick Healthcare, told members of the Massena Town Council at the meeting that they did not see pension costs would not be decreasing. Freed Maxick Healthcare had been hired by the Board of Managers in 2013 to examine the financial implications of maintaining the status quo or converting to another type of facility, including a not-for-profit. They have predicted that the hospital would be in the red by 2017 at its current pace.

“It’s absolutely not happening,” Mr. Arakelian said. “They are not decreasing. I don’t expect them to decrease.”

But while Massena Memorial Hospital officials say they expect pension costs to continue increasing, members of the Civil Service Employees Association Local 887 have said it will be the opposite, with costs going down. That’s also the word from the Comptroller’s Office.

“We have announced the rates for 2015, which is a decrease from 2014. At present, we anticipate that the 2016 rates will also go down, but we will not announce by how much until August,” said Matthew Sweeney, press secretary for the Comptroller’s Office.

CSEA spokesman Mark M. Kotzin said that’s what they’ve been trying to tell hospital officials all along.

“We fully expect them to go down based on several factors,” he said, including the recovery of the stock market, the recovery of the pension fund from losses it sustained and the addition of Tiers 5 and 6 to the pension program.

Because of the discrepancy between the Comptroller’s Office and the Freed Maxick report, Mr. Kotzin questioned the accuracy of the company’s study.

“To us, that’s a big red flag and calls into question the accuracy of their study. The fact that they did not independently verify the information given from the hospital also calls into question its accuracy,” he said.

“They said in their report that they were relying on many assumptions. There are facts out there. The Comptroller has even said publicly, ‘We reached the peak and the trend is going to be going downward,’” Mr. Kotzin said. “How can we rely on their estimate of what’s going to happen in the future when their people are just plain wrong? The facts do not go with what he said. That calls into question the accuracy of the entire report.”

Mr. Sweeney said that, should Massena Memorial Hospital become a not-for-profit organization, current employees would need to transfer to another participating employer if they wanted to continue in the state pension system.

“Vested benefits accrued to date would be unaffected by the move to a not-for-profit. If they wanted to accrue additional pension credit they would need to be employed by a participating employer,” he said.

Mr. Fahd has said has said that new employees would be offered a new retirement program, and the hospital would work with the CSEA and New York State Nurses Association to develop a new retirement program. But Mr. Kotzin said the employees would lose out by not being to accure additional state pension credit if they remained at MMH.

“If they’re vested, they won’t lose what they already put into the system,” but will not be able to accrue additional benefits if they remain at Massena Memorial Hospital, “which would seriously diminish what they would potentially stand to get if they completed a full 30 years of service at the hospital,” Mr. Kotzin said.

“Organizationally we’ve tried to do what we can to ease those pressures on employees by having new tiers put in place. We’re not looking to increase the costs on the employers either. But there is a cost to providing a secure pension for employes who have their life service to the hospital,” he said.

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