New York's highest court yesterday affirmed the comptroller's authority over the state's multibillion-dollar pension fund system.
The unanimous decision by the state Court of Appeals affirms a lower court ruling, which said the state Legislature acted unconstitutionally in 1990 when it changed the way the state made payments to the pension fund, moving to the projected unit cost system from the aggregate cost system.
The Legislature's action provoked a lawsuit filed by the four unions against the state and then-state Comptroller Edward V. Regan, who in turn supported the union's suit against the funding change.
Like Regan, the new state comptroller, H. Carl McCall, has also spoken against the pension system change, and has also filed a brief in support of the unions.
In a press release, McCall yesterday said, "I am very pleased with the Court of Appeals' unanimous decision to uphold the lower court's ruling and throw out the projected unit cost method of calculating pension contributions for state and local governments."
McCall also said that the decision, forcing the state to dump the projected unit cost system, will create a $3 billion liability for the state and local governments. Steven Greenberg, a spokesman for the comptroller's office, said the office is working on a plan to pay for the liability.
Rating agency officials said the ruling -- and its budget impact -- is a matter of concern. "It's something we will address with the state," said Richard Marino, a director with Standard & Poor's Corp., which rates state general obligation bonds A-minus with a stable outlook.
Moody's Investors Service rates state GOs A, while Fitch Investors Service rates the state A-plus.