Welcome news for New York public schools and the taxpayers who fund them: Pension costs are expected to drop about 17% for the 2019-20 school year.
At the January meeting of the NYSTRS Board, the System’s Actuary estimated that the employer contribution rate (ECR) for the 2019-20 school year will be 8.86% of payroll, down from the 10.62% rate to be applied to 2018-19 payroll. The final rate will be adopted by the Retirement Board at its July 31 meeting.
Contributions associated with the estimated 8.86% rate will be collected in fall 2020, but employers are alerted well in advance to assist with budgeting.
The ECR is determined annually through an actuarial valuation of NYSTRS’ assets and liabilities. These contributions have been collected without fail throughout the System’s history, keeping NYSTRS among the best-funded and most-secure plans in the country. The plan’s funded ratio is nearly 100% - well above the national average of 73%.
However, the Actuary also noted that because investment returns are a major component of ECR calculations and recent returns have been lower than expected, future ECRs will likely be higher. In an administrative bulletin to NYSTRS-participating employers announcing the estimated 8.86% rate, school officials were cautioned to keep this in mind when developing future budgets.
Over the past 30 years, investment income has accounted for 85% of NYSTRS’ income. Member and employer contributions made up the other 15%.