New York State’s largest public pension fund earned 1.91 percent during the quarter ending Dec. 31, state Comptroller Thomas DiNapoli announced today.

Meanwhile, the New York State Teachers’ Retirement System (NYSTRS) has confirmed its contribution rate will drop for the first time in five years when pension bills for 2015-16 come due in the fall.

Neither announcement says much about the long-term future path of taxpayer-funded pension costs in New York, however.

The Common Retirement Fund, of which DiNapoli is sole trustee, had previously announced a first-quarter gain of 3.8 percent and a second-quarter loss of 0.52 percent. The October-December result points to a compound, three-quarter gain of 5.23 percent, compared to the fund’s full-year assumed 7.5 percent rate of return.  (By comparison, the S&P 500 gained 10 percent and the S&P Global 1000 gained 2.8 percent during the same period.)

Bottom line: to hit its 7.5 percent target, the fund will have to gain another 2.2 percent in its final quarter. As of early this afternoon, the domestic and global stock indices had risen between 1.5 to 1.8 percent since Dec.31, after a volatile start to the year. So maybe the fund is on track.  Or, then again, maybe it isn’t

The Common Retirement Fund supports the New York State and Local Employee Retirement System (ERS) and Police and Fire Retirement System (PFRS), which cover the entire state and municipal government workforce outside New York City. Teachers and administrators outside New York City belong to the separate NYSTRS system, governed by a board of trustees (which includes a representative of the comptroller.)

While both pension funds rebounded strongly in 2013 and 2014, they have yet to completely recover from their lackluster average performances since 2000. The Common Retirement Fund is still a ticking bomb for taxpayers.  And while stock prices flirted with all-time highs today, another bear-market (i.e., a “correction” of 20 percent or more) is inevitable. If it comes within the next year, public pension costs in New York will rise sharply again before the end of this decade — before they have finished falling from previous highs.

NYSTRS, too, is still digging out from losses sustained in the crashes of 2002-03 and 2007-09—and, as we were reminded this week, its benefit payouts are also rising. Meanwhile, the NYSTRS banks on risker assumptions than the CRF. As noted here a year ago:

In fact, the [NYSTRS] contribution rate continues to understate the true costs of teacher pensions–because NYSTRS, like many similar funds across the country, continues to assume that it will earn a healthy average return of 8 percent a year for decades to come. Because it does not adjust for the level of risk inherent in an asset allocation heavily weighted to stocks, it produces overly optimistic future projections, according to the growing consensus of economists, actuaries and independent analysts of every stripe.

Even state Comptroller Thomas DiNapoli, generally a guardian of the pension status quo, has dropped his pension fund return assumption to 7.5 percent. New York City assumes a return of 7 percent — which former Mayor Bloomberg suggested was still the sort of promise you’d expect to hear from Bernie Madoff. The closest thing to a risk-free rate, reflecting the fact that the pension is constitutionally guaranteed and thus risk-free from the recipients’ perspective, would be closer to 3.4 percent. The next best thing, a AAA-rate corporate bond, would be about 4.7 percent. But note: even a slight reduction from 8 percent would drive a big increase in taxpayer-funded teacher pension contributions.