Even after recent reform, New York teacher pension costs will rise 37%

by Grace

A history of New York State public school pension reform:

20130309.COCNYPensionTiers2

Recent reform that saw the creation of Tier 6 is unlikely to offer taxpayers any relief for at least a decade.

Over time, lawmakers have passed legislation to reduce the cost of pensions to state and local governments and school districts. The avenue they have used to do this is to create additional “tiers”—levels of membership that carry different benefits and requirements. After the passage of Tier 5 in 2009, calls for pension reform persisted, and a new Tier 6 was enacted this year.

Gov. Cuomo has said that the recently enacted pension reform will save the state more than $80 billion over the next 30 years. However, according to the NYS Comptroller’s Office, the creation of Tier 6 will not significantly lower pension costs for schools in the immediate future to prevent the kinds of program cuts many districts face in the next few years.

This is because the new pension tier applies only to new employees hired after April 1, 2012. With school districts struggling to balance their budgets in this difficult economy, most are laying off staff rather than hiring new employees who would fall into the new tier.

Pension costs have continued to surge out of control, as I wrote last year.

… skyrocketing public pension costs are “the single biggest threat” to local schools’ ability to deliver educational  services for New York children.  In our local district, pension costs have risen more than 50% over the last two years and now account for 7.2% of the total budget, up from 5.1% in 2010-11.  This has meant ongoing cuts in student services as taxes are diverted to pay for pensions.  The trend is up, and by 2015 pension costs are expected to eat up 35 percent of property tax collections.

There is no relief in sight.  Teacher pension costs for the 2013-14 school year will rise 37%.

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