Governor Andrew M. Cuomo today detailed the potential savings over the next five years for counties and cities across New York State that could be realized under the Stable Rate Pension Contribution Option.
Under the plan, Nassau County would save $88.9 million in FY 2014 and $317.3 million over the next five years.
Last year, Governor Cuomo and the Legislature put in place Tier VI, a new pension plan for all state and local government employees hired after June 2012. With employees hired under Tier VI requiring a lower pension contribution rate by local governments, as new employees replace retiring workers, localities will see total pension contribution rates significantly decline and realize significant savings over the long-term.
The Stable Rate Pension Contribution Option, outlined by the Governor in the 2013-14 Executive Budget, allows local governments, including counties, cities, towns, villages, and school districts to access the savings of Tier VI immediately. Under the plan, localities are given the option for a stable pension contribution rate that significantly reduces near-term payments but still keeps the pension systems fully funded over the long term. Local governments who opt in would avoid significant volatility in contribution rates and be better able to plan for the future. Though the locality receives short term relief, because the contribution rate remains fixed, the total amount paid in to the fund by the locality would not be diminished over the life of agreement, thereby maintaining the fiscal stability of the pension fund. These savings will better enable local governments and school districts to maintain necessary services to their residents and students. The option is voluntary and requires approval from the appropriate trustee - either the Comptroller's office or Teachers' Retirement Board.
"The difficult financial pressures facing localities are well-known here in Albany, and my administration from day one has been committed to helping local governments meet their budgetary obligations as well as continue to provide critical services to their residents," Governor Cuomo said. "While the Tier VI reforms were a major step toward helping local governments deal with the pension crisis, we understand that more help is needed. For this reason, the Executive Budget proposed the Stable Rate option to offer local governments and schools a bridge to the long-term savings of Tier VI, as well as greater predictability."