New York State lawmakers have introduced a bill that would permit local school districts outside New York City to bond out up to $1.1 billion in pension contributions over the next two years. The borrowing scheme reportedly is the brainchild of -- who else? -- the statewide teachers' union.
In the wake of state school aid cuts, with employer bills from the New York State Teachers' Retirement System (NYSTRS) slated to nearly quadruple over the next five years, the unions' local affiliates face growing pressure to curb contractual pay increases. Pushing off a portion of the pension contribution is a way for the unions to protect jobs and pay hikes, and to reduce some of the political pressure for fundamental pension reform. Of course, these are short-term objectives. As for the potential compounding of financial risks over the longer term, supporters of the bill are adopting the Scarlett O'Hara approach: "tomorrow is another day."
"Deferring" pension costs into the future is nothing new in the Empire State. Last year's state budget included a new provision giving the state and its local governments the option of artificially "capping" their pension contributions by converting amounts over the cap into a series of 10-year IOUs, which the pension fund will count as assets. This idea was promoted by state Comptroller Thomas DiNapoli, sole trustee of the giant New York State and Local Retirement System, who is fond of boasting that New York's pensions are fully funded because, unlike New Jersey or Illinois, "we pay our bills." DiNapoli does not oversee the NYSTRS, however.
For more on this topic, see my post at the Empire Center's "Torch" blog.
In the wake of state school aid cuts, with employer bills from the New York State Teachers' Retirement System (NYSTRS) slated to nearly quadruple over the next five years, the unions' local affiliates face growing pressure to curb contractual pay increases. Pushing off a portion of the pension contribution is a way for the unions to protect jobs and pay hikes, and to reduce some of the political pressure for fundamental pension reform. Of course, these are short-term objectives. As for the potential compounding of financial risks over the longer term, supporters of the bill are adopting the Scarlett O'Hara approach: "tomorrow is another day."
"Deferring" pension costs into the future is nothing new in the Empire State. Last year's state budget included a new provision giving the state and its local governments the option of artificially "capping" their pension contributions by converting amounts over the cap into a series of 10-year IOUs, which the pension fund will count as assets. This idea was promoted by state Comptroller Thomas DiNapoli, sole trustee of the giant New York State and Local Retirement System, who is fond of boasting that New York's pensions are fully funded because, unlike New Jersey or Illinois, "we pay our bills." DiNapoli does not oversee the NYSTRS, however.
For more on this topic, see my post at the Empire Center's "Torch" blog.
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