Retirement costs ease for school districts

PHOTOGRAPHER: Marc Schultz

Teachers Bob Testa (St. Gregory's School) and Mary Hanchar (Iroquois Middle School) assemble parts of model wind generators at a training event for teachers held by General Electric in January.

Some teachers may have the stock market to thank for their jobs.

The teachers retirement system has done well in the stock market in recent years, so school districts are seeing a big savings in pension contributions for next year. Some districts are adding teachers — lots of teachers — because it’s suddenly much more affordable to do so.

Schenectady is adding more than 17 teaching and social work positions, as well as administrative jobs and teacher aides. Schenectady isn’t alone — every school district in Schenectady County added at least one position in the 2015-2016 proposed budget.

Others are adding programs, like Saratoga’s summer program to get students ready for kindergarten.

And for some school districts, the lower pension cost is saving the day when other costs skyrocketed. In Mayfield, the savings was just less than the increased cost in health insurance. Together, they nearly balanced out, helping the district stay under the state-imposed property tax cap.

The reduction in pension contributions came at the perfect time, superintendents said.

Even without an increase in state aid, the savings was so extensive that Schenectady would not have had to cut anything, Superintendent Laurence Spring said.

“We would have been saying, ‘We can’t add anything but we don’t have to cut anything,’ ” he said.

The school district’s contributions were reduced by $3 million. After also receiving an increase in state aid, the district added about $3.2 million in spending, mainly for new staffing.

In Mayfield, the savings nearly balanced the existing budget, without any additions.

The district’s health insurance is going up $145,000, interim Superintendent A. Paul Scott said. The pension savings is $133,000.

“Those are being reallocated to health insurance,” he said. “We appreciate that very much.”

In Saratoga, the pension contribution reduction was one of several cost reductions this year, Superintendent Michael Piccirillo said.

“This helps to allow for new programs and program enhancements,” he said.

That included $41,700 for Get Ready, a summer program for incoming kindergartners.

Pension costs are going down because the teachers’ pension system uses a five-year average when determining how much money to charge each school district. For the past five years, the stock market collapse in 2008-2009 was part of the calculation, forcing contributions up.

The pension fund lost 20 percent of its value when the stock market bottomed out in early 2009.

Now, finally, that year is out of the equation.

For every district, this year’s contribution was 17.53 percent of the teachers’ salaries. For next year, it will be about 13.26 percent, said TRS spokesman John Cardillo.

The TRS pension plan is 92 percent funded, meaning it already has most of the money it needs to fund future retirements.

It is so well-funded that until a few years ago, districts paid only about 1 percent of their teacher salaries every year. The change has been abrupt and painful for many budgets, particularly when the percentage climbed to 17.53 percent this year.

The only time it’s ever been higher than that was in 1987, when it was 18.8 percent, Cardillo said.

Jacking up the cost for districts in recent years was the right decision for the fund, Scott said, even though it them in a bind.

“Yes, it provided a bit of hardship,” he said. “But it is a solid system. They handled the matter thoughtfully.”