Pension Smoothing Options a Bust with School Districts

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ALBANY, NY (07/23/2013)(readMedia)-- The New York State Association of School Business Officials (NYSASBO) recently surveyed its members on whether their school districts planned to participate in the pension smoothing options and the results show little interest by school districts.

According to the poll conducted in July, approximately less than 4% of school districts plan to participate in the pension smoothing options for either the Teachers Retirement System (TRS) or state Employee Retirement System (ERS) made available to them in the state Budget adopted in March. The pension smoothing options were developed as a way to assist school districts with their cash flow issues and staying within their tax caps by reducing their pension contribution rates in the near term and allowing them to pay back the full amount owed over a longer period of time.

For example, the 2013-14 TRS pension contribution rate would be lowered from 16.5% to 14% for two years and then rise back up to 16% in year three and 18% in subsequent years plus interest. The TRS Pension Smoothing option would have the most impact on school districts since a majority of their employees are in that pension system.

With 226 or 30% of schools responding to the survey, 92.5% declined to participate in the ERS pension smoothing option for non-educational school staff, like bus drivers, nurses, custodians, etc. and 91.2% declined to participate in the TRS pension smoothing option for educational staff like teachers, teaching assistants, etc.

The reasons for not participating range from "postponing the inevitable" and "shifts burden onto the backs of future taxpayers" to "not a very fiscally sound way to operate" and "district does not want to push current costs onto future years".

"In the absence of any real effort by state policymakers to provide significant mandate relief to school districts, this pension smoothing option was concocted to offer temporary and immediate fiscal relief to those school districts who faced educational or fiscal insolvency in the near term", stated Michael J. Borges, NYSASBO Executive Director.