GOOD NEWS FOR MUNICIPALITIES, SCHOOL DISTRICTS AND TAX PAYERS AS STATE REDUCES PENSION CONTRIBUTION RATES FOR EMPLOYERS
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Tuesday, September 9, 2014 -- In what should ease some of the pressure on municipalities and school districts, the percentage of payroll that New York State requires government employers to pay for many workers' pensions will decline significantly in fiscal year 2015-16, State Comptroller Thomas DiNapoli announced this last Tuesday.
For workers enrolled in the New York State Employees Retirement System, which includes municipal workers as well as some school district employees such as nurses, business office staff, secretaries, custodians, monitors, aides,bus drivers, food service workers, and transportation office workers, mandated employer contributions will decline by nine percent – from 20.1% to 18.2% of payroll. Even assuming contractual salary increases and maintaining the same workforce, municipalities and school districts would still see a drop in their actual pension contribution. The rate does not apply to teachers, who are enrolled in the Teachers Retirement System (TRS), for which in 2014-15, school districts will contribute 17.53 % of payroll. The TRS rates for 2015-16 are not likely to be released until later this fall. |
Dark colored line shows mandated employer contributions to the New York State Employee Retirement system which will decline from 20.1% of payroll this year to 18.2% of payroll for 2015-16. The lighter line shows employer contributions to the Police and Firefighters Retirement system which will decline 11% (from 25% to 21.4% of payroll). Not shown is the mandated employer contribution to the Teacher's Retirement System (TRS), which for this year is 17.53% of payroll. The 2015-15 rate should be announced later this fall. (Source - New York State Comptroller's website)
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The contribution rate for ERS is the lowest it is has been since 2012, and down from a high of 20.9% in 2014. Just as the sharp increases in contribution rates in recent years were largely a result of the 2008-2009 stock market collapse, the back to back decline in mandated ERS contributions can be attributed to the market’s rebound. The actuarial report, on which contribution rates are based, takes into consideration the previous five year’s investment performance, and with 2008-09 now no longer factored in, the contribution obligation of municipalities has come down from levels that previously had not been seen since the 1970s. (see graph above)
“The state pension fund’s solid investment performance has delivered another decline in employer contribution rates,” Mr. DiNapoli said. “The effects of the 2008 financial market collapse are still being felt around the country, but New York’s pension fund is well-funded, is steadily recovering and will continue to meet its obligation to our more than one million Retirement System members and retirees.”
In the budget adopted this past May, the North Shore school district designated nearly $2 million for ERS this school year. In response to questions from Northwordnews, School Superintendent Dr. Edward Melnick said that the district anticipates that the ERS budget line will decrease for 2015-16, but not by 9% since payroll will be higher than it was for 14-15 due to contractual raises. According to an analysis by Northwordnews, assuming an ERS payroll increase of 3%, mandated contributions would decline by more than $100,000.
The Village of Sea Cliff has budgeted $283,104 for ERS this year, and assuming no change in its workforce and modest increases in salaries, its mandated contribution would decline as well.
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“The state pension fund’s solid investment performance has delivered another decline in employer contribution rates,” Mr. DiNapoli said. “The effects of the 2008 financial market collapse are still being felt around the country, but New York’s pension fund is well-funded, is steadily recovering and will continue to meet its obligation to our more than one million Retirement System members and retirees.”
In the budget adopted this past May, the North Shore school district designated nearly $2 million for ERS this school year. In response to questions from Northwordnews, School Superintendent Dr. Edward Melnick said that the district anticipates that the ERS budget line will decrease for 2015-16, but not by 9% since payroll will be higher than it was for 14-15 due to contractual raises. According to an analysis by Northwordnews, assuming an ERS payroll increase of 3%, mandated contributions would decline by more than $100,000.
The Village of Sea Cliff has budgeted $283,104 for ERS this year, and assuming no change in its workforce and modest increases in salaries, its mandated contribution would decline as well.
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