State TRS Costs Slated to Rise
The New York State Teachers' Retirement System has informed school districts to expect a large increase in the employer contribution rate for the 2013/14 school year.
The TRS said the current year's rate of 11.84 percent of payroll will rise about 40 percent next year to between 15.5 and 16.5 percent. A more exact estimate of the rate will be issued in February 2013. That estimate is expected to be closer to the actual rate that will be assessed.
The TRS provides pensions to school employees who hold State Education Department certificates, including teachers, teacher assistants and administrators. The TRS contribution rate is expected to jump again for the 2014/15 school year.
The Huntington School District expects to pay $4.8 million into the TRS during the 2012/13 school. That amount would jump by an estimated $1.6 million to $2 million to between $6.4 million to $6.8 million depending upon the final rate for 2013/14.
"This increase is going to have a significant budgetary impact," Huntington Superintendent James W. Polansky said. "Of additional concern is that additional increases are expected over the next several years."
While there had been some hope among school officials that the four-year string of rate increases would level off, that won't be happening. Districts were informed earlier that the Employee Retirement System, which provides pensions to non-instructional employees, is raising its employer contribution rate from 18.9 percent of payroll to 20.9 percent.
The jump in the TRS rate is being blamed on the poor performance of investments in global capital markets. The overall return on pension assets was 2.8 percent in the most recent fiscal year that ended June 30, 2012. Most of the pension system's revenue comes from the return on its investments, with the balance comprised of employer and employee contributions.
State law requires districts to contribute to both the TRS and ERS at set rates. The state's property tax cap law provides some relief to districts when the increase in pension costs exceeds two percent. A portion of any increase is exempt from the cap.
The TRS employer contribution rate has risen steadily since 2002/03:
| 2002-03 | 0.36 percent |
| 2003-04 | 2.52 percent |
| 2004-05 | 5.63 percent |
| 2005-06 | 7.97 percent |
| 2006-07 | 8.6 percent |
| 2007-08 | 8.73 percent |
| 2008-09 | 7.63 percent |
| 2009-10 | 6.19 percent |
| 2010-11 | 8.62 percent |
| 2011-12 | 11.11 percent |
| 2012-13 | 11.84 percent |
| 2013-14 | 15.5 to 16.5 percent (estimated) |