Posts tagged ‘Property tax’

May 8, 2013

Quick Links – Public pension problems round-up

by Grace


Our local public schools must cut student services to pay soaring pension costs.

The budget numbers tell the story:

  • Total school costs will increase 3.3% over last year.
  • Cost of teacher pensions alone will increase 42%.
  • Pension costs account for at least 75% of the total budget increase.*
  • To pay for the 42% increase in teacher pension costs, the school will cut teaching staff and increase class sizes.

Public schools throughout the state are in a similar situation.   “Retirement and insurance costs continue their relentless climb”, causing a nearby district to cut 30 jobs.  Another local school administrator explains their pension costs:

Almost 80 percent of the hike comes from a $3.5 million rise in state-mandated retirement expenses, Purvis said.

* Total employee benefits costs account for 96% of the total budget increase.



The New York property tax cap introduced two years ago includes a carve-out created to allow tax increases that pay for teacher pensions to be exempted from the cap.  As it turns out, this exemption has been the main reason for the average tax increase more than doubling above the 2% statutory base cap up to 4.6% .

The additional increase is driven entirely by a provision of the 2011 tax cap law that excludes a portion of increased employee pension costs from the limit on tax levy increases. Without the pension-related increase, the 2013-14 levy limit statewide would average 2.7 percent, including all other district-specific exclusions and allowances for voter-approved capital expenses and physical additions to the local tax base, along with factors such as growth in the tax base and net changes in the value of payment in lieu of tax (PILOT) agreements.

The pension exclusion hurts poor school districts the most because the calculation method especially affects communities with lower property values.

… the pension exclusion in the tax cap law effectively makes it easier for school districts to raise taxes on property owners who can least afford it.

… The pension provision—added at the insistence of Assembly Speaker Sheldon Silver—diminishes the protection the law was supposed to provide for some of the state’s poorest taxpayers.



A “pension-smoothing” provision was recently introduced in New York, allowing school districts to postpone full funding of pension liabilities.

Moody’s does not look favorably on this plan to kick the can down the road.

Moody’s Investors Services warned Monday that the state’s new pension-smoothing plan is “a stopgap with long-term risks” that could endanger the state’s pension fund and the credit of local governments.

The plan, part of the state budget approved last month, allows for local governments and schools to essentially pay a flat rate for pension costs over 12 years, avoiding the steep cost increases that the municipalities have faced.

Opening the door to future underfunding of pension liabilities

Moody’s says that the concern is the flat-rate payments could underfund the state’s roughly $150 billion pension fund, which provides benefits to 1 million retirees and current local and state workers. That could lead to higher costs for municipalities and schools in future years, the credit agency said.




 In Illinois, public pensions already gobbling up education funding

… Education funding is being strangled by the same python that is strangling the rest of state government’s finances: pension obligations….


 “The pension costs really are the Pacman that’s eating our budget,” Shirey said.

February 13, 2013

Quick Links – High schools teach retail management; what colleges really want; property tax break for condos

by Grace

◊◊◊  Shopping center partners with Yonkers high schools to teach retail management skills

YONKERS — Lots of high school students get jobs at the mall. But 26 Yonkers students are about to learn the whole operation — which could lead to better jobs down the road.

The students are getting an inside look at the Ridge Hill shopping center, thanks to a new partnership between Forest City Ratner Companies, the center’s developer, and Yonkers Partners in Education, a private group working to better prepare Yonkers students for college and careers.

Over 10 weeks, the students will learn about multiple sides of retail management, from restaurant operations to security to marketing. They’ll meet with Ridge Hill managers and officials from Lord & Taylor, Whole Foods, the Cheesecake Factory, National Amusements Showcase and the Westmed Medical Group.

The project, called Ridge Hill Academy, comes with a three-year $100,000 grant from Forest City Ratner.

One aim is for students to be mentored by store employees.  During the first session, the importance of public relations was part of the lesson.  One of the students spoke at the press conference, and the group posed for pictures with Mayor Mike Spano and other officials.  Some of the students attend a vocational high school, and from the photos it appears most participating students are black or Hispanic.

‘Ridge Hill Academy’ to introduce Yonkers students to retail management (

◊◊◊  “AP Courses and Other Myths about What Colleges Really Want” – video sponsored by Massachusetts high school features panel of admissions administrators

I haven’t viewed the entire video,and it received mixed reviews from the comments on a CollegeConfidential thread .  We have a similar panel discussion each year at our local high school, but typically with representatives of lower ranked schools.  The emphasis is on trying to reduce the mystery and stress of the college admissions process.

Topic: “AP Courses and Other Myths about What Colleges Really Want” A Panel Discussion with Community Question & Answer Period

Admissions officers from five Massachusetts universities will tackle the stress over getting into college and talk about what they’re really seeking in a panel discussion for the Lexington community.

Getting into college is an obsession for many Lexington students and their parents – an obsession that starts as early as elementary school. For too many, it is assumed that college admissions offices admit students with the “most” – the most AP classes, the most extracurricular activities, the most summer internships and the like. The result is a lot of stressed out students and parents. But are they right – is this what college admissions directors are looking for?…

Panelists: Lee Coffin, Tufts University dean of undergraduate admissions; William Fitzsimmons, Harvard College dean of admissions; Kevin Kelly, UMass-Amherst’s director of admissions; John McEachern, Boston University’s director of admissions, and Stuart Schmill, MIT’s director of admissions.

The event is co-sponsored by the LHS PTSA, Diamond PTA, Clarke PTA, Lexington School Health Advisory Council (SHAC), Youth Services Council/Lexington Human Services Department and the Collaborative to Reduce Student Stress.

◊◊◊  In most New York municipalities, condo owners pay about one-third of the property taxes that single-family homeowners pay.

This special tax break rankles many homeowners who feel condo owners are not paying their fair share.

The property-tax system is based on the proposition that one’s real estate holdings get taxed equally, based on a percentage of the value of the real estate. According to New York law, however, condos are assessed for property-tax purposes as if they were rental units….

Single-family homes, meanwhile, are taxed on their fair market value — what they’d fetch in the open market. They pay taxes on the full value of their homes and end up subsidizing the condo owners who get the break.

Defenders of the tax break argue that condo owners are paying a fair percentage based on the smaller amount of land they occupy, while critics say that their use of government services is equivalent to those of single-family occupants.

Co-op owners receive a similar property tax break.  I live in a town with a relatively high percentage of co-op residents, so I see first-hand how this inequity increases taxes for some residents.

Tax Watch: Condos catch property-tax break (

December 28, 2012

Under New York 2% tax cap, protected pensions will cause even more cuts to student services

by Grace

In New York, public schools are struggling with rising pension costs and a 2% tax cap as they plan for next year’s budgets. As the situation becomes desperate, one official warns that school security may suffer. 

School districts face a daunting challenge as they begin drafting budgets for 2013-14: Rising pension costs alone could eat up most or all of their allowable tax-levy increase under the state’s tax-levy cap.

“It’s debilitating for us, terrible,” said Thomas DePrisco, a member of the Pearl River Board of Education.

Pension costs will increase nearly 40%, forcing cuts in student services.

District contributions to the pension system for teachers and administrators are expected to rise close to 40 percent next year. This increase could translate into hundreds of thousands of dollars for small districts and several million for larger districts, which will require raising the tax levy by 2 percent or 3 percent in most districts.

Since the state cap starts at 2 percent before adjustments, most districts will not be able to increase spending in other areas, from health insurance to curriculum materials, without making equivalent cuts to programs and staff.

Students are being punished.

“The numbers are punitive, a shocker,” said Kendall Egan, a member of the Rye school board and president of the Westchester-Putnam School Boards Association. “You’ve already filled up your cap. It’s hard to make your community understand that there is so much out of the control of a school board. We’ll be back to going line-by-line through our budgets, looking for all possible savings.”

Pension contributions will increase to about 16% of payroll costs.

Under state law, all school districts outside of New York City must contribute a percentage of their payroll each year to two pension systems, one for teachers and administrators, and one for support staff. The percentages are determined by the two systems’ past investment performances. Next year’s contributions are tied to the period between 2007-08 and 2011-12, when investment returns were down.

The New York State Teacher Retirement System recently notified districts that it expects to raise their 2013-14 contribution to between 15.5 percent and 16.5 percent of payroll, up from 11.8 percent of payroll this year. The employer contribution has varied between 6 and 9 percent of payroll in recent years.

The TRS fund, which pays pensions to retired teachers and administrators, has $88 billion in assets. It is paying benefits to almost 150,000 people, up from 100,000 in the year 2000. Its active membership — those who will receive future benefits — has increased from 225,000 people in 2000 to 277,273 this year.

Schools will start with a deficit.

The Valhalla school district expects to increase its Teacher Retirement System contribution by about $930,000 to more than $3 million, while its Employees Retirement System contribution will rise by about $91,000. These increases alone will require raising the district’s tax levy by about 2.5 percent.

“We start the budget planning process in a deficit and wonder how we’ll stay under the cap,” Superintendent Brenda Myers said.

Teachers’ pensions were protected under the property tax cap legislation but student services were not.

The property-tax cap, going into its second year, starts by limiting tax-levy increases to 2 percent, but the number can go up or down depending on several factors. Pension cost increases over 2 percent are exempt from the cap, which is little consolation for districts that are up against the cap anyway.

Politician wants to give teachers even more protection.

Assemblywoman Ellen Jaffee, D-Suffern, said she is considering proposing legislation that would exempt additional pension costs and perhaps tax certiorari payments from the cap.

“It could help stabilize the situation,” she said. “There are very real concerns about districts facing insolvency.”

‘rising pension and health care costs’ leading to ‘dangerous territory’

Ken Slentz, deputy state commissioner of education, said that rising pension and health care costs will result in people losing their jobs so districts can stay under the cap.

“Where are we headed?” he said. “Dangerous territory.”

Recent pension reform had little effect.

A key factor is that 86 percent of all teachers and administrators statewide are in Tier 4 of the pension system, meaning that they contribute 3 percent of their salary to the system for only 10 years and nothing thereafter. Tiers 5 and 6, created since 2009, require ongoing employee contributions but currently include only 8 percent of all members.

In a low blow that may have been meant to evoke fears related to the recent tragedy in Newtown, one official intimates that school security may suffer.

“The impact on our budgets is devastating,” Burrell said. “If we can’t raise tax levies, and taxes are already too high for many people, districts will have to make uncomfortable choices. Will districts have to choose between AP classes and security?”


March 15, 2012

Skyrocketing public pension costs are eroding educational opportunities for New York children

by Grace

Skyrocketing public pension costs, the single most burdensome state-imposed mandate, are slowly but surely eroding educational opportunities for the children of New York.

Our local school district’s pension costs have risen over 50% in the last two years.
During that same time, instructional salaries have increased only 6.9% and the entire budget only 6.0%. The actual dollar amount of additional pension costs has surpassed that of salary increases.  Meanwhile, most other expenses that affect students directly, including sports, music and instructional staff, have been cut to compensate for soaring pension costs.

This same scenario is being played out at public schools throughout the state.  At Pelham, a nearby school district, their pension costs have also increased 50% in the last two years.

Pelham schools’ budget plan cuts jobs, adds $2.3M; benefits blamed
… budget calls for $65,523,020 in spending, an increase of $2.3 million from the current year. The superintendent pinned much of that increase on ever-climbing health care and pension costs.


In New York City … pension costs now eat up one in every six tax dollars that city residents pay — and 12% of the entire city budget. That’s more than the operations of the Police, Fire and Sanitation departments combined.

Deficits Push N.Y. Cities and Counties to Desperation
Pension costs are a particular problem. The stock market collapse of 2008 decimated public pension fund investments, and municipalities are now being asked for greater contributions to make up for the losses. The impact has been drastic: Three percent of New York property tax collections were used to pay pension costs in 2001; by 2015, pension costs are expected to eat up 35 percent of property tax collections.

Our school district’s pension costs as a percentage of the total budget have grown from 5.1% to 7.2% over the last three years.  This is not a good trend.  If they continue to rise as expected, today’s relatively modest cuts to student services will be looked upon as the “good old days”.

Meanwhile, in their highly promoted mandate relief advocacy campaign our school leaders have chosen to ignore pensions.  Instead, they have highlighted those mandates that affect our students directly, like special education.  They make no mention of the pension mandate, which is the one having the most negative impact on our children.

Conveniently, pension costs were exempted from the state’s 2% property tax cap on property tax increases recently imposed on school districts.  This carve-out was a nice special treatment for teachers.

Wages and benefits outpacing inflation combined with reduced student services.  Is this the future for New York public education?

September 7, 2011

New York public schools face a 29% increase in pension costs

by Grace

School districts are being socked with a 29 percent increase in their pension costs this school year.

The increase means schools will pay 11.11 percent of their payroll toward retirement costs in 2012, up from 8.62 percent in the prior school year, which ended June 30, the teachers’ retirement system announced this week. It’s the first double-digit rate in 22 years….

School officials said growing pension costs were equal to the total increase in school spending this year, up about 1.3 percent. The increase caused homeowners’ tax levies to grow on average about 3.4 percent this year.

This is not new information  – I learned about this last spring when we voted on school budgets.  In my local school district, taxpayer-funded pension costs will increase about 37% over last year’s, representing more than 50% of the total budget increase.  Pension/health/salary costs went up, while the total of all other school expenditures had to be cut as a way to keep the total budget increase to a manageable 3.9% that translates into an estimated 7% tax levy increase.

The pension expense comes as schools in July 2012 will have to abide by a property-tax cap.  The cap will limit tax increases to 2 percent a year or the rate of inflation, whichever is lower….

Pension costs are expected to grow further. In a memo to schools this month, the New York State Teachers’ Retirement System said it expects next year’s costs to exceed this year’s rate. It won’t have those estimates until November….

The Empire Center For New York State Policy, a conservative think tank, estimated in a report last year that taxpayer-funded contributions to the teachers’ retirement system will more than quadruple over the next five years. The group estimated pension costs for state and local government workers would more than double over the same period.

“It’s something everybody has to get ready for,” said E.J. McMahon, the group’s senior fellow.

School boards should provide taxpayers with longer-term budget projections

Mahon questioned why the teachers’ retirement system doesn’t provide districts with long-term outlooks on pension costs.

“You have districts that are negotiating contracts for three or four years, so why not tell them?” McMahon said.

Cardillo said they give districts about 18 months’ notice and can’t project rates further because economic conditions could change.

Multi-year projections are the norm in the business sector, for good reason.  Most taxpayers understand that  “economic conditions could change” and deserve to have this type of critical information when voting on budget issues.  Chappaqua Central School District is one that does a good job offering five-year budget projections.

Also, New York urgently needs to rein in its “skyrocketing” public employee pension costs.

Related:  Passing the pension time bomb in New York State

You can read the entire article, which received 119 comments from readers, after the jump.

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