Cuomo budget offers 'stable' pension option
New York State municipalities could save money over the short term with lower pension contributions for a number of years under Gov. Andrew M. Cuomo's new budget plan, but the amount they kick in would have to increase in later years to make up for any shortfall.
To put a brake on soaring pension contributions, Cuomo would offer cash-poor counties, cities, towns and school districts the option of locking in a set pension contribution for a set period, sparing them from the volatility they now endure when the pension funds' investment returns outperform or underperform.
"These stable rate pension contributions will dramatically reduce near-term payments for employers, but will require higher than normal contributions in the latter years," Cuomo said in his budget plan.
The governor also proposed a way for fiscally distressed municipalities and schools to limit arbitrators from awarding public employees pay packages worth more than 2 percent of a contract if one of two conditions were met: their average full value property tax rate topped $6.57 per $1,000 or their reserves were below 5 percent of the general fund, according to budget documents.
Under this provision, Suffolk and Rockland counties would fall under this cap on arbitrators' awards, but Westchester, Putnam and Nassau counties would not, according to the Cuomo administration's analysis.
Cuomo said arbitrators need clear guidelines; they are now only required to consider a municipality's ability to pay, which is not defined. And "there is no piggy bank in Albany," he said.
Many municipalities and school districts around the state are struggling to pay their bills, for everything from infrastructure to payrolls, because of the slow economic recovery and the property tax cap that began in 2011.
Under the governor's new "stable" pension contribution option, rates in the new fiscal year that starts on April 1 would be 12 percent for the New York State Employees' Retirement System versus an expected 20.9 percent; 12.5 percent for the Teachers' Retirement System versus an expected 16.5 percent; and 18.5 percent versus an expected 28.9 percent for the Police and Fire Retirement System.
Cuomo said his pension proposal was "fiscally neutral" for the state's retirement funds.
New York's approximately $150 billion pension funds for civil service and police and fire employees are about 90 percent funded, one of the nation's strongest.
Still, the Sunshine Review, a nonprofit group that advocates for state and local government transparency, said New York's "rapidly growing pensions costs are one of the most expensive mandates for local governments."
With Yancey Roy