School pension costs are set to increase 37 percent next school year, the state Teacher’s Retirement System quietly noted in a bulletin to districts this month.
The increase is slightly less than the high end of the range estimated by the $80 billion fund in October. In October, the fund predicted that pension costs for the 2013-14 school year, which starts July 1, would grow to between 15.5% and 16.5% of payroll.
The actual rate, which was set this month, is 16.25%, the bulletin said.
School pension costs have soared in recent years because of the decline of Wall Street investments. A decade ago, schools paid nearly nothing into the fund, which has about 425,000 members and retirees.
Unlike most years, the bulletin doesn’t give a hint as to whether pension costs are set to increase again in the 2014-15 school year, but all indications are that they will.
Like Comptroller Thomas DiNapoli, who is the sole trustee of the $150 billion pension fund for state and local workers, the Teacher’s Retirement System is reviewing whether to support Gov. Andrew Cuomo’s pension-smoothing proposal. It would let schools and local governments pay a flat rate of 12.5 percent of payroll for pensions for the next 25 years, rather than deal with the annual ebb and flow.
The Teacher’s Retirement System has hired an outside expert to review Cuomo’s proposal.
“NYSTRS will thoroughly review this proposal,” the bulletin said. “This review will be weighed along with the System’s fiduciary responsibility to ensure the long-term soundness of the plan.”