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ALBANY – School districts across New York will be hit with another whopping pension-cost increase in 2014 – a continuing effect of the stock market crash of 2008 and the rising increase of retirement obligations.
The state Teachers’ Retirement System, which manages the pension fund for retired teachers and school administrators, notified districts they will have to pay about 16 percent for every pension dollar paid for the 2013-14 fiscal year.
That’s up more than one-third from the current rate, 11.84 percent.
In real dollars, that will mean taxpayers will be paying an additional $600 million in teacher-retirement costs for 2013-14, according to an analysis by the Empire Center, an anti-tax group. That could eat up most of the room school districts have under the new statewide property-tax cap for that upcoming year, according to E.J. McMahon of the Empire Center.
Under the cap, schools and local governments that want to exceed the new 2 percent cap on tax-levy increases must obtain a 60 percent “supermajority” from voters or a local governing board.
The increase will be payable in fall 2014.
The huge hike was expected - groups have been predicting for at least a year that the rate would hit 16 percent for 2013-14. The rate has been climbing steadily since 2009-10, when it was 6.19 percent.
Retirement system spokesman John Cardillo said the amount of the hike “could be” a surprise to some school districts “but not the fact that it is going up.”
The teachers’ retirement fund, invested heavily in the stock market, lost about 20 percent of its value following the 2008 economic downturn, Cardillo said. It grew just 2.8 percent for the fiscal year ending June 30, 2012 - well below the 8 percent retirement officials projected.