$200M borrowed from state pension fund

About 165 of more than 3,000 local governments, school districts and agencies opted into the program, which requires that they pay interest to the $140.3 billion fund on the deferred portion of their pension payments, Eric Sumberg, a spokesman for Comptroller Thomas DiNapoli, said in an email yesterday.

The state also plans to use IOUs for at least $562.9 million as part of the program this year, Sumberg said.

"While the state's pension fund is one of the strongest performers in the country, costs have increased due to the Wall Street meltdown in 2008-2009," DiNapoli, a Democrat, said in a statement. "Amortizing pension costs is an option for some local governments to manage cash flow and to budget for long-term pension costs in good times and bad times."

By 2015, 35 percent of local budgets will be consumed by pension costs, up from 3 percent in 2001, Gov. Andrew M. Cuomo said Monday at a meeting of the New York State Conference of Mayors and Municipal Officials in Albany.

Under similar circumstances, other states, including Illinois, have issued bonds to fund their retirement plans.

New York's voluntary plan to defer some cash payments was created in 2010 by DiNapoli. It allows state and local governments to hold off on paying a portion of pension costs if they agree to pay interest on the deferred amount. The plan is meant to smooth out fluctuations in the rate public employers pay to the system by also allowing localities to build reserve funds when earnings on the fund are high.

Last year, local governments deferred $43.4 million, Sumberg said. The totals for this year were reported Tuesday by The New York Times.

"It doesn't make the obligation go away, but gives you the opportunity to amortize, over a period of time, the increase," DiNapoli said at the mayors conference. "It gives you help right now, not 30 years from now."