Cuomo Proposes Creating New Pension Tier

New York Governor Andrew Cuomo announced Wednesday a proposal to create a new tier for the public pension systems for New York State and New York City, bringing a plan to an issue that has been one of the most talked about among school districts and municipalities.

"This bill institutes common-sense reforms to bring government benefits more in line with the private sector while still serving our employees and protecting our retirees," Cuomo said in a statement. "Reducing the skyrocketing pension burden faced by local governments and schools will also help get control of local property taxes that are driving New Yorkers from their homes and from the state."

The creation of the new tier would impact new hires made who contribute to the various funds, including the Employee Retirement System (ERS) Teachers Retirement System (TRS) and the Police and Fire Retirement System (PFRS).

The new tier, dubbed "Tier VI," would do the following (the quoted text below is from Cuomo's announcement):

• Raising the retirement age from 62 to 65
• Ending early retirement
• Requiring employees to contribute six percent of their salary for the duration of their career
• Providing a 1.67 percent annual pension multiplier
• Vesting after 12 years instead of 10 years
• Excluding overtime from final average salary
• Using a five year final average salary calculation with an 8 percent anti-spiking cap
• Excluding wages above the Governor's salary of $179,000 from the final average salary calculation
• Eliminating lump sum payouts for unused vacation leave from the final average salary calculation
• Prohibiting the use of unused sick leave for additional service credit at retirement

The Board of Education discussed the cost of health care for district employees as recently as Monday, estimating liability for $37.7 in health care and benefits.

In the , employee benefits are expect to cost the schools $904,301 more in the upcoming school year than the current one, according to the budget summary.

Similarly, government officials in both Pleasantville and Briarcliff Manor have said the rising cost of pension and health costs will likely result in heightened taxes for residents.

Robert J. Reidy, Jr., Ph.D., Executive Director of the New York State Council of School Superintendents applauded the proposal.

"Governor Cuomo's measure to rein in pension costs is commendable. In recent years, most school districts have had to freeze or cut all other spending to absorb steep pension cost increases," he said. "This plan will save billions in taxpayer dollars and provide much-needed relief to school districts all over New York state."

See attached PDFs for Cuomo's proposed Tier VI.