State-imposed pension contribution rates jump dramatically
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November 9, 2012
Schuylerville and other school districts across the
state are predicting another extremely difficult budget season due to a
number of factors, including minimal increases to education aid, the tax
levy cap and growing state deficits in the wake of Superstorm Sandy.
Adding to the economic woes are the state-imposed increases in
contributions that school districts must make to employee pension funds.
The contributions to the Employee Retirement System (ERS), which covers such non-instructional staff as secretaries, food service workers and maintenance staff, is jumping to 20.9 percent of employees’ salaries. For Schuylerville, this required increase is expected to mean $307,000 in added expenditures for the 2013-2014 based on preliminary figures available. The district has a reserve fund established to help offset some of the increase.
The required Teacher Retirement System (TRS) contribution increases will have an even greater impact on the overall budget, with districts required to contribute between 15.5 and 16.5 percent of the total teacher payroll in 2013-2014. For Schuylerville, this translates into a 40 percent—or $469,000—increase based on a comparison of line item budget expenditures between the current year and next year.
“We’re going into the budget season already knowing that we’re required to fund more than three quarters of a million dollars in increased pension contributions,” said Superintendent Dr. Ryan Sherman. “We anticipated some type of increase in contributions, but certainly not this much. It puts us at an extremely challenging starting point for developing a sound spending plan for the 2013-2014 school year and beyond.”
The larger than anticipated increases in contributions are due, in part, to poor performance in stock market investments. Many school officials are calling for the state to allow districts to establish reserve funds for TRS contributions to help offset the large fluctuations. Such accounts are allowed for ERS contributions.
“It makes good fiscal sense for districts to plan ahead for large increases in pension contributions, just as homeowners can put away money into a savings account for unanticipated costs,” Sherman said.
For more information on the employer contribution rates, please click here to view a New York State Teacher Retirement System bulletin. [PDF file]