School pension costs to rise 37 percent next year

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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.”

bull2013-1 by jspector

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3 Comments

  1. Obviously, if the districts had put away 12.5% for the last decade, instead of virtually nothing, they wouldn’t have created this new “crisis” that is now being used to attack workers as getting “too rich” pensions. Typical lack of planning that workers end up paying for. They have known about this obligation all along. I assure you, the people that made these decisions aren’t having any financial problems in their retirement.

    Now they want to borrow future potential savings generated by the less generous Tier VI to pay today’s obligations. The opposite of sound financial practice, as proposed by our “fiscally conservative” Governor. And everyone is too afraid of him to come out flatly and say so.

  2. NY local govts, school districts, counties, and cities, paid NOTHING into the NYS Retirement systems for about 9 years due to the sweatheart deal from Gov Pataki (Republican) when the stock market was doing great.
    Instead of using the years where they paid NOTHING as their base for their horrible slanted scare tactics, right wing stiffs such as Astorino, Marvin, and others should stop slamming working people and speak the truth on how they are twisting the facts.
    Cant trust Republicans