Friday, 19 April 2013 00:00
We have listened to and read disparate versions of the facts surrounding the Manhasset Board of Education’s preliminary working budget, particularly as it relates to the increase in pension costs. While we clearly are not experts on the subject of pension benefits, we are concerned that there is a great deal of misinformation in the air, so we attended meetings on the budget and did some research on our own. Here is what we have learned.
Manhasset School District employees generally belong to one of two public pension systems: (I) the New York State Teachers’ Retirement System (TRS); or (II) the New York State Employee Retirement System (ERS). New York State mandates that all school districts within the state participate in the pension systems and make annual contributions to the systems. Participation in the TRS and the ERS is not negotiated between the Manhasset School District and its employees.
The pension benefits that Manhasset retirees ultimately receive depend on numerous factors, including: the system to which they belong; the salary they receive; the date of their employment; their total years of service; and the age at which they retire.
The required pension contribution rates for all eligible Manhasset School District employees are set annually by the TRS and the ERS to ensure that both systems are essentially fully funded to cover all of their future obligations. The Manhasset School District does not set the annual pension contribution rates.
With respect to pension benefits, the majority of retiree benefits are funded by investment income generated from the pension funds, over which the Manhasset School District has no control. To the extent investment returns are below contribution rates, the school districts must make up the shortfall. As investment returns fluctuate, so do the contribution rates paid by the district. By way of example, if in a given year, the TRS and the ERS set a contribution rate of 8 percent, and the pension funds earn a return of 3 percent, the school districts, including the Manhasset School District, must contribute 5 percent to make up the difference.
We recently received good news that the state legislature passed legislation creating a program designed to help the school districts manage pension costs, which the Manhasset Board of Ed adopted on April 4, thereby enabling the BOE to reduce the preliminary budget by $1.2 million.
Several people in the community have suggested that another way to reduce pension costs is to fire teachers or reduce salaries. But the fact is that just one year ago many of these same people applauded the re-negotiated three-year teachers’ union contract, and until that contract expires in two years, we are bound by the commitments made in that contract. Therefore, the teacher and employee pension system that we have today will not go away and will not be cut if you vote “No.”
So put your vote to good use and support our schools! We strongly encourage you to vote “Yes” on May 21.
Brian and Jeannette Reilly