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Teacher pension contribution rates rise for school districts

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Teacher pension rates are expected to take a bigger bite out of upcoming school district 2013-14 budgets.

Statewide, employer contributions to the New York State Teacher Retirement System are expected to increase from this year’s 11.84 percentage to around 15.5 or 16.5 percent, according to preliminary numbers.

The Employee Retirement System is expected to rise from this year’s 18.9 percent to 20.9 percent.

Those numbers are not likely to decrease.

Jefferson-Lewis Board of Educational Services Superintendent Jack J. Boak Jr. is worried the increases may hurt districts as they prepare next year’s budget.

“This is a huge increase in their cost,” he said.

The NYSTRS sent an “Estimated Range for the Next Employer Contribution Rate” bulletin to school administrators and college presidents in October with the preliminary estimates. These numbers were relayed to the Indian River Central School District Board of Education during budget discussions Thursday.

“Poor returns in the global capital markets are the driving force behind recent rate increases,” according to the bulletin. “The one-year rate of return on system assets for the fiscal year ending June 30, 2012, was 2.8 percent. We anticipate future increases in the (Employer Contribution Rate).”

Last year, Indian River contributed $2,725,729 to the NYSTRS and $1,306,502 to ERS. Another $100,000 was reserved for retired cafeteria employees, according to Business Manager James R. Koch.

“With those percentage increases, we’re estimating that the whole increase is going to be $1.2 million,” he said.

He expects the official percentages to be announced in February, but he is budgeting for the higher percentage to be safe.

“While our primary goal is to ensure the plan is properly funded, we recognize this rate has a significant impact on school district budgets,” according to the NYSTRS bulletin. “Our notices are sent as early as possible for planning and budgeting purposes.”

The employer contribution rate has run the gamut from nearly 23.5 percent in the early from 1980s to 0.36 from 2001 to 2003, according to the bulletin. It lists the rates from 1978-79 through 2012-13.

In 2011, the pension contribution rate reached 11.11 percent, the first double-digit number in more than 20 years.

NYSTRS invests the money contributed by school districts, then doles it out as teachers retire.

“They didn’t have to charge the schools as much because the market was doing so spectacularly,” Mr. Boak said. “When the market crashed, they lost a lot of money that they had to recoup.”

The cost is fixed, he said, and cannot be changed even if a district is struggling to budget money for other unfunded mandates.

“We’ll be able to deal with it,” Mr. Koch said. “The impact aid will certainly help us, but the smaller districts, it’ll kill them.”

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