Gov. Andrew Cuomo says municipalities across the state could save millions of dollars over the next five years if they participate in a Stable Rate Pension Contribution program.
Last year, Cuomo and the Legislature put into place Tier VI, a new pension plan for all state and local government employees hired after June 2012. Tier VI requires a lower contribution rate by local governments, as new employees replace retiring workers, localities will see their rates significantly decline, according to a news release from the governor's office.
The Stable Rate Pension Contribution Option, outlined by the governor in his 2013-14 Executive Budget, would allow local governments, including counties, cities, towns, villages and school districts, to access some savings immediately.
The release said local governments that opt in would avoid volatility in contribution rates and be better able to plan for the future. The current pension system doesn't let localities know what they owe or have to pay from one year to the next. This fixed rate would allow local government to plan and budget accordingly from one year to the next.
Fulton County Administrative Officer Jon Stead said the county board hasn't looked into the details of the program yet, but some officials have concerns that the state comptroller hasn't endorsed this option.
He said if the comptroller were to release his projections of potential savings through this option, supervisors would be more comfortable with what is being offered.
The governor's office projects these savings for local cities under the Stable Rate Pension Contribution proposal:
Gloversville - $800,000 in 2014 and $2.9 million?over five years.
Johnstown - $500,000 in 2014 and $1.7 million over five years.
Amsterdam - $1 million in 2014 and $3.7 million over five years.
The governor's estimated savings for local counties are as follows:
Fulton County - $2.6 million in 2014 and $8.9 million over five years.
Hamilton County - $500,000 in 2014 and $1.6 million over five years.
Montgomery County - $1.5 million in 2014 and $5.2 million over five years.
"We are interested in evaluating if that really will bring down the cost," Stead said. "It will bring down the cost in the short term, but our concern would be if we were to hit another period of unstable economy five or 10 years from now, then we would have larger payments at the end of this stable-rate period."
He said the board will "cautiously" study the pros and cons of the plan in the weeks ahead.
Gloversville Mayor Dayton King questioned where the money would come from to allow the governor's proposal to work, saying now the city doesn't experience any savings through Tier VI.
"I can't advise our taxpayers to pay any more money for our ongoing bills," King said. "At this point, I will talk about it with our Common Council and we will look more into it. If there is ability to save some money, we will certainly look at it."
City Commissioner of Finance Bruce Van Genderen said he worries the program would only spread the cost over a longer period rather than actually solve the problem.
"They said we won't have to pay any more than we already do right now, but they don't say we will be paying less over the longer period of time," he said.
Montgomery County Board of Supervisors Chairman John Thayer said he finds it hard to believe the state will be able to reduce the county's pension rate and not have it come from somewhere else.
"I don't see how it is going to work yet, and I don't see the state being that generous to lower the rate without getting the money somewhere else," Thayer said.
If a local government chooses to participate in the fixed-rate plan, it would remain in it for a period of years determined by the comptroller and the Teachers' Retirement System, the governor's office said in the news release.
The release said the option is voluntary and requires approval from the appropriate trustees-the comptroller's office for municipalities and the Teachers' Retirement Board for school districts.
Levi Pascher can be reached at firstname.lastname@example.org.