DiNapoli: Governments must contribute more to pension system next year

ALBANY — State Comptroller Thomas DiNapoli said Thursday that local and state governments will have to contribute more to the public pension system next year.

The average employer's rate beginning next year will increase to 13.1% of payroll, from 11.6%, for the majority of governments. For the smaller police and firefighters retirement funds, the average will rise to 27.8% of payroll, from 27%.

The two funds in the system pay retirement and disability benefits to public employees and death benefits to their survivors.

The cost of public pension contributions is one of the biggest expenses for villages, towns, cities and counties, and a potential driver of property tax increases for their taxpayers.

“The state pension fund’s performance in the fiscal year that ended March 31 was strong, but recent domestic and global economic volatility demands caution,” DiNapoli said. “We remain focused on long-term stable returns for New York’s public employers and workforce.”

DiNapoli is the sole trustee of the state’s public worker pension system. Local and state governments must pay the employer contribution, which is a major driver of costs for their budgets.

DiNapoli said the projected return on investments will remain at 5.9%, but the volatility and worries about a possible recession for U.S. and foreign economies requires greater contributions by employers to protect the system.

“This is a prudent step, recognizing increasing costs due to the real economic landscape, and it's not unexpected,” said Patrick Orecki of the Citizens Budget Commission, a nonprofit fiscal watchdog. “The impact for both state and local taxpayers will be some higher costs to their budget for the coming year. For the state, these higher costs are on top of the looming multibillion budget gaps the state recognized last month. It all reinforces that the state needs to focus on restraining spending growth, and following through on its plans to build reserves.”

Stephen J. Acquario, executive director of the New York State Association of Counties, said counties are concerned as they manage the economic fluctuations.

“Financial markets are not performing well right now and the horizon does not look promising,” Acquario said. “Counties are struggling with record inflation and the beginnings of a slowing economy that may likely slide into recession. Costs are rising for counties in a lot of areas including energy and fuel, construction materials, health insurance, workforce recruitment challenges and pension costs will go up as well.”

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.