Pension and fringe-benefit costs for New York state workers are growing at an alarming rate.
The average state worker receives about $28,000 in pensions, health care and other benefits on top of an average salary of $63,750, the New York Post reported.
The tab will continue to soar in the next couple of years. The Budget Division predicts that costs of health, retirement and other benefits will equal about 62 percent of the employees’ salary within three years, up from 44 percent now. Benefit costs could hit $7.9 billion by 2012.
“It’s just unsustainable,” said Lise Bang-Jensen, who runs the Public Payroll Watch blog for the Manhattan Institute. “Public-employee unions obviously want to keep the status quo, and that’s understandable. But whether taxpayers can continue to pay these benefits is a good question.”
Taxpayers absorb most of the cost of the benefits guaranteed by law and contract. Taxpayer pension fund contributions are rising at every level of government for public employees to make up for billions of dollars in lost investments during the recession.
Gov. David A. Paterson and the state Legislature last year agreed to some modest changes in the state pension system for state and local public employees by creating a new Tier 5 for workers hired after Jan. 1 of this year. It will take longer for them to become vested in the system. They will also have to work until they are 62, up from the current 55, to receive their full benefit at retirement.
However, it will take the state and local governments years, even decades, to realize any savings as older employees gradually retire and are replaced with new workers.