Details are out on how much schools and local governments will be paying to the state pension fund in 2017. Capital Tonight’s Nick Reisman takes a look at what it means for the multi-billion dollar fund.
Last month, Comptroller Tom DiNapoli suggested the rates local governments and schools contribute to the state pension fund were unlikely to change.
“Where I think we’re headed and again, these are not the final numbers, is probably to essentially a flat or a stable rate for the coming year,” he said.”
And on Thursday, DiNapoli’s office announced just that: The percentage of payroll schools and municipal governments in New York will largely remain the same in 2017.
“It’s not going up, it’s a little more predictable this way. We know what to expect, what to budget for,” said Tim Kremer, the executive director of the state School Boards Association.
While that’s welcome news for those who set budgets, the flat rates come after three straight years of the state reducing pension costs on local municipalities.
“The expectation that the employer contribution rate will be going down is welcome news. It didn’t go down that much, but it’s going in the right direction,” Kremer said.
Fiscal watchdogs note many elected officials initially didn’t have to worry about pension costs a decade ago. Now the rates are closely watched for what they could mean for property tax bills.
“Pretty much the entire generation of state and local elected officials took office and came into their own during a period when pension costs were artificially low or rock bottom,” said Empire Center President EJ McMahon.
The state pension fund overall last year posted its worst rate of return since the end of the recession in 2009. It’s unlikely contributions will continue to decline.
“I don’t think you’re going to see much of, if any, a significant decrease in pension contribution rates over the rest of his next decade,” McMahon said.
The state pension fund overall is valued at around $180 billion.
© 2016 Time Warner Cable News
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