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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 school district budgets in 2013-14.

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

And employer contributions for the Employees Retirement System are 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 Cooperative Educational Services Superintendent Jack J. Boak Jr. is worried the increases will hurt districts as they prepare next year’s budget.

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

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

“Poor returns in the global capital markets are the driving force behind recent rate increases,” the bulletin said. “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 Teachers’ Retirement System and $1,306,502 to the Employees Retirement System. An additional $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 percentages to be finalized in February but 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,” the bulletin said. “Our notices are sent as early as possible.”

The employer contribution rate has run the gamut from nearly 23.5 percent in the early 1980s to 0.36 percent 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.

The system invests the money contributed by school districts, then distributes it 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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