Pension costs


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The $90.9 billion teachers retirement investment fund assumes a long-term return of 8 percent annually, but it generated just under 3 percent last year, spokeswoman Heidi Brennan said.

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Pension costs

  1. 1. Rate rise new worryTeacher retirement costs to jump 37 percent, state warns school districtsBy Rick KarlinPublished 11:33 pm, Wednesday, February 13, 2013ALBANY — School districts and taxpayers statewide will have to dig deeper next year to fund a 37 percent increase in the pension contributionrate for teachers and other workers.While school districts now allocate 11.8 percent of their payrolls for retirement costs, taxpayers will have contribute 16.25 percent next year,the New York State Teachers Retirement System told school districts earlier this month.Much of the increase was driven by the same challenges facing other public retirement systems — waves of baby boomers retiring, combinedwith low investment returns since the 2008 financial crash.The $90.9 billion teachers retirement investment fund assumes a long-term return of 8 percent annually, but it generated just under 3 percentlast year, spokeswoman Heidi Brennan said.The fund has about 277,000 members and 149,000 retirees.In their bulletin about the increase, the teachers retirement system notes that Gov. Andrew Cuomo has proposed a smoothing plan in whichschools and municipalities can borrow against the future to keep their costs down. Under Cuomos proposed Stable Rate Pension Contributionplan, participants would lock in a 12.5 percent contribution for 25 years.The idea is controversial, with critics saying it raises questions about protecting the pension fund. The retirement system is consideringwhether to allow the smoothing – if it is approved on the state level.Municipalities such as cities, towns and counties are also struggling with rising pension costs.The state Employee Retirement System, similar to the teachers fund, said contributions by localities are going up 11 percent.Public pensions are guaranteed by the state constitution. The localities from which people retired are required to make up whatever shortfallscome from their respective retirement funds.Part of the pension cost increase is exempt from the 2 percent tax cap that school districts are working under. The cap isnt set in stone,though, as voters can go beyond 2 percent with a 60 percent majority.Regardless of whether they exceed the cap or whether schools devote 12 percent or 16 percent to retirement costs, pensions are a bigbudget item."Its another pressure on school districts," added David Albert, spokesman for the state School Boards Association.Michael Borges, executive director for the Association of School Business Officials, said his group wants to let school districts create reservefunds specifically for rises in pension costs. The proposal would need to be approved by lawmakers and the governor."Were mortgaging our future to pay for our past," Borges • 518-454-5758 • @RickKarlinTUPage 1 of 1Rate rise new worry - Times Union2/15/2013