Limits the amount of employer contributions to the state retirement system

BILL NUMBER:S2592B

Title of bill

An act to amend the retirement and social security law and the education law, in relation to imposing a cap on the amount of contributions paid by employers

Purpose of the bill

To limit the growth of pension expenditures by local governments and school districts (outside New York City) to a maximum of 2% or the consumer price index, whichever is less. This bill is designed to assist local governments and school districts stabilize their budgets.

Summary of provisions

This bill amends retirement and social security law sections 17 and 317 and education law section 521 to:

1. limit the increases that public employers (outside New York City) shall be required to pay to the retirement system to the lesser of 2% more than the prior year or the inflation factor;

2. define inflation factor on the basis of the national consumer price index;

3. require that the sum representing the difference between the maximum required and the amount computed by the comptroller to be due from a public employer under existing law be appropriated to the retirement system out of the state's general fund.

Justification

Significant stock market fluctuations, the downturn in the economy and increases in the number of municipal retirees has resulted in a strong upward pressure on municipal and school district contributions to the state retirement system required by the comptroller. Double-digit increases in required pension contributions have severally impacted local and school district budgets diverting monies needed for day-to-day operations and causing significant property tax increases. This legislation would level off the pension contribution increases and relieve local real property taxpayers of having to face steep property tax increases. This bill would not diminish the pension benefit retirees are entitled to but would require the difference between the maximum contribution required and the amount computed to be due from the public employer under existing law be paid by the state from its general fund.

Prior legislative history

2011-12; A.8505 Abinanti: referred to governmental employees. 2013 -14 A7104 Abinanti : referred to governmental employees 2013-14; S.2592A Latimer: REFERRED TO CIVIL SERVICE AND PENSIONS

Fiscal implications

This proposal could save local governments and school districts millions of dollars annually. It is estimated that employer

contributions to the New York State and Local Retirement System would not decrease for the fiscal year ending March 31, 2015 and that estimated employer contributions for the New York State Teachers Retirement System would decrease by $640 million for contributions collected in fall 2014 and $170 million for contributions collected in fall 2015. The savings for future years would depend on actuarially determined contributions, employer payroll and the rate of inflation.

Local fiscal implications

To be determined

Effective date

This act shall take effect immediately and apply to public employer contributions commencing in the employer's fiscal year ending 2015.