Apr 22, 2024
NY Budget Sweetens Pensions for Some Workers at $4 Billion Cost
, Bloomberg News
(Bloomberg) -- Taxpayer contributions to New York City and state pensions will rise by $4 billion under a benefit sweetener for some public employees included in the state budget.
The budget reverses Tier 6, a 2012 pension reform pushed through by former Governor Andrew Cuomo after the financial crisis opened up yawning funding gaps for public employee pensions. The reform extended the average salary to calculate pensions to the last five years of employment for workers hired after April 1, 2012 — a group that encompasses about half of the city and state workforce.
Under the new legislation, the state would calculate pensions based on the average of the final three years of service, retroactively increasing pension payouts to the cohort and boosting benefits for not-yet-hired employees.
Governor Kathy Hochul has signed the legislation.
Lawmakers and unions say the change will ease a labor shortage that has hurt services.
In a news release, the AFL-CIO said the pension reforms mark “a momentous stride toward restoring fairness and retaining invaluable public sector workers.”
Read more: NY Pension Costs to Rise by More Than $4 Billion Under New Plan
According to the new legislation, city pension payments for civil employees, teachers, police officers, firefighters and non-teaching school workers would rise by $2.2 billion, relative to the current value of future contributions. The city expects to spend $9.4 billion on pensions this fiscal year ending June 30.
Payments to the state and local employees’ retirement system would rise by $1.5 billion.
While the state teachers’ pension did not disclose the current value of future contribution increases, the Empire Center for Public Policy, a conservative think tank, estimated the cost to taxpayers at $667 million.
“There is no justifying this giveaway, which will cost over $4 billion,” said Ken Girardin, director of research at the Empire Center in a news release. “It is a heist from current and future taxpayers.”
--With assistance from Zach Williams.
©2024 Bloomberg L.P.
