Archive for February 4th, 2013

February 4, 2013

Despite increased education spending, surging pension costs only allow New York schools to ‘tread water’

by Grace

The 4.4% increase in school spending proposed by New York Governor Andrew Cuomo is not enough according to some education advocates.

Cuomo’s budget plan for the fiscal year that starts April 1 includes a 3 percent increase — about $610 million — in education aid plus $203 million to offset high pension contribution costs. An additional $75 million would go toward initiatives highlighted in his State of the State address.

Proposed funding barely allows schools to “tread water”.

“The year-to-year costs in education just to tread water are more than the amount of money in the proposed budget,” said Billy Easton, executive director of the labor-backed advocacy group Alliance for Quality Education. “If we actually want to improve the schools — that’s not even addressed here.”

Governor Cuomo argues that the 8.6% increase in education funding over the last two years has been double the inflation rate.

“That is double the rate of inflation,” Cuomo said in Tuesday’s address. “That is four or five times the increase in home values during the same period of time and it’s during a period of time where student enrollment has gone down.”

Schools across the state report that steep rises in pension costs more than cancel out any increases in proposed funding.

New Paltz Superintendent Maria Rice said teachers’ retirement costs alone at the Ulster County district are growing by about $900,000, so the $333,500 increase won’t come close.

The district would get about $12.4 million, a 2.8 percent increase from last year, when including building aid. The county’s average is 2 percent.

Based on the aid, Rice projects the district will have to cut between $800,000 and $1 million to balance the budget, which is “luckily” less than last year’s gap, she said.

The district cut its pre-K program and increased class sizes this year. Next year, she said she’ll debate whether to cut Advanced Placement courses or eliminate an elementary foreign language program which she said has been successful.

Some schools are considering taking advantage of a new “pension-financing plan”.

The pension stabilization option would give local governments and school districts a lower, more predictable employer contribution rate over a period of 25 years or more, rather than high bills now and presumably lower ones later.

Not everyone believes this new scheme will work, with some calling it a “threat to pension solvency”.

The state’s largest public union is right. Gov. Andrew Cuomo’s proposal to “smooth” pensions for local governments and school districts is “a bait-and-switch scheme … that will allow public employers to underfund their pension obligations,” as the Civil Service Employees Association described it last week.

Kicking the can down the road
Instead of providing real mandate relief to remedy the unsustainable rise in pension costs, the governor is promoting a quick fix that will temporarily hide the problem until a few years down the road when it will resurface.  This has become a typical scenario among our politicians.

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