March 1, 2019 -- In an administrative bulletin released this past week and published on its website, the New York State Retirement System (NYSTRS) announced that school district pension costs will decline significantly this budget season as the percentage of total teachers' salary that districts are required to contribute to the fund will fall by nearly 17%.
Currently the contribution rate for the 2018-19 school year is 10.62% of a teacher's salary. Next year, that rate will fall to 8.86%. This past August, the NYSTRS announced that it expected the employer contribution rate for 2019-20 to be somewhere between 8.5 and 10.5%. The 8.86% rate is the lowest it has been since 2010-11.
Because the rate is based in part on the previous 5 years' investment performance, rates skyrocketed in the aftermath of the Great Recession peaking at 17.53% of payroll in 2014-15. The rate has come down more or less steadily since then, except for a bump upward from 9.8 to 10.62% in the 2018-19 budget. In the heady days of the late 1990s stock market boom and the few years that followed, contribution rates had collapsed to as low as 0.36% of payroll.
For 2018-19 (this current year's spending plan), the North Shore Schools had budgeted $5,222,623.40 for teachers' pension costs. In the draft budget 2019-20, which can be found on the district website, that number has fallen to $4,758,225.22 - a preliminary figure based on the range that had been announced in August.
Contributions, however, are likely to once again rise for 2020-21.
"As you are aware," the NYSTRS bulletin warns school districts, "stock market indices globally have experienced downturns. Tepid investment returns will result in higher future ECRs [employer contribution rates]. You may wish to consider this scenario as you develop your operating budgets."
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