As predicted by the St. Lawrence Count treasurer, one of the largest and growing expenses for St. Lawrence County, its towns, villages and school districts will start to go down in the next fiscal year.
New York State Comptroller Thomas P. DiNapoli has announced that employer contribution rates to the New York State Common Retirement Fund will decline slightly in Fiscal Year 2014-15.
Since the decline of financial markets and the recession of the last few years, the value of the investments made by the fund to pay pensions was diminished, forcing the fund to require higher contributions from municipal governments and school districts, just when other factors were acting to cut state revenues and, consequently, the amount the state figured it could afford to send to schools, towns and counties.
The pension burden was one of the items that St. Lawrence County Treasurer Kevin Felt cited earlier this year as one of the most difficult problem areas for the county’s finances.
The difficulty in keeping up with the cost began in 2008, St. Lawrence County Treasurer Kevin Felt says, when the value of investments in the state-run pension fund, such as securities and real estate, took a big hit along with other investors in stock markets, and the national economy took a downward turn, so more money was required to keep the pot of money “fully funded.”
In the state’s fiscal year 2009, that fund dropped in value by 26.4 percent, “which amounted to 34 percent due to expected returns” that had been calculated in the formula but which did not materialize as the markets dropped, according to Eric Sumberg, spokesman for the state comptroller’s office.
“That was the largest drop in the fund’s history. That is the primary driver for the increased costs” that municipalities have seen over the last few years, Sumberg said.
In some places, the cost of contributions was up 20 percent or more in a single year.
But “The New York State Common Retirement Fund’s strong gains over the last four years have mitigated some of the impact of the financial market collapse of 2008-2009,” DiNapoli said. “Strong investment performance, along with a revision in actuarial smoothing, has lowered the employer contribution rate for 2014-15.”
So, as County Treasurer Felt predicted last spring, “There could be a slight increase next year, maybe a percent, and then less in the next couple of years.”
According to the comptroller’s office, the average contribution rate for the Employee Retirement System (ERS) will decrease by 0.8 percent of payroll, from 20.9 percent to 20.1 percent.
Projections of required contributions will vary by employer depending on factors such as retirement plans, salaries and the distribution of their employees among the six public employee retirement tiers.
The employer contribution rates just announced will apply to each employer’s salary base during the period of April 1, 2014 through March 31, 2015.