Governor Andrew Cuomo; AP Photo
By Joseph Spector, Albany Bureau Chief
ALBANY -- Gov. Andrew Cuomo said his plan to allow local governments to essentially smooth out their pension costs wouldn't be mandatory.
If local leaders have concerns, don't do it, Cuomo said.
"It's a financing option. If a mayor doesn't like it, don't take it," Cuomo said Tuesday on 1300-AM (WGDJ) in Albany.
In his budget proposal last week, Cuomo pitched a plan that would let local governments avoid major spikes in pension costs. They would be paying less now with the expectation that in future years, they would make up the difference when older employees retire.
Cuomo said the goal is to help local governments and schools deal with soaring pension costs over the next few years.
"We have a pension crisis in this nation, by the way -- not just in this state," Cuomo said.
Some local governments have embraced the proposal, while Comptroller Thomas DiNapoli and the state Teacher's Retirement System are approaching it cautiously. DiNapoli and the teacher's pension fund would have to approve the deal, as well as the state Legislature.
"We are reviewing the proposal and continue to ask questions of the Division of the Budget," said DiNapoli spokeswoman Jennifer Freeman. "We have concerns about the impact on the fund but have an open mind until we finish our review."
In a statement, the Teacher's Retirement System said it would also take a wait-and-see approach. School pension costs are set to grow nearly 40 percent in the coming school year.
"NYSTRS will thoroughly review the governor's proposal for a flat rate pension contribution from participating employers," the fund said in a statement. "This review will be weighed along with the system's fiduciary responsibility to ensure the long-term soundness of the plan."
The state's pension fund, at roughly $150 billion, covers about 1 million current employees and retirees in state and local governments. The school pension fund, at about $88 billion, covers about 149,000 retirees and 277,000 active members.
Cuomo said he's open to different options, and he chided DiNapoli to increase the earnings of the pension fund -- which contributes to the rise or decline of contributions from local governments. DiNapoli is the sole trustee of the pension fund.
"If he has a better idea, I would love to hear it," Cuomo said. "Maybe he can increase the performance of the fund so he doesn't charge the localities as much."
An increasing number of local governments have entered into DiNapoli's amortization plan for pensions, which allows them to essentially borrow off the pension fund to limit spikes in expenses.
Rochester Mayor Thomas Richards said Monday he supports Cuomo's initiative. The city's pension costs have jumped from $19.5 million to $52 million over the past four years.
"When I looked at the budget and I looked at this particular proposal, it was the best thing there to getting us through another couple of years," Richards told reporters in Albany after he testified at a budget hearing.
Syracuse Mayor Stephanie Miner said she has concerns about the proposal, particularly whether it is simply delaying the problem for future years. The pension plan would delay some payments for up to 25 years.
"I fear that opting into this program could be a hasty solution for cities to fix immediate cash flow needs," Miner said in her budget testimony Monday.