The state Teacher’s Retirement System today voted to hire an outside firm to review Gov. Andrew Cuomo’s proposal to let the pension system smooth out its costs over the next 25 years.
The system, which controls an $88 billion pension fund for New York teachers, is sending out a request for proposal to hire a third-party actuarial firm to review the governor’s proposal.
Cuomo, in his budget plan, wants to let schools and local governments defer pension costs with the expectation that savings will be recouped decades from now. The plan has been hailed by some local leaders, but some have knocked it for being a scheme.
Comptroller Thomas DiNapoli has indicated he has concerns, but hasn’t signaled whether or not he will allow the state pension fund, which totals more than $150 billion, to enter it. The Teacher’s Retirement System has also taken a wait-and-see approach, and now is going outside to get some recommendations.
What the teacher’s fund does will be a critical test for Cuomo’s plan. The board is made of up legislative appointees through the state Board of Regents and appointees by the state teacher’s union. The comptroller also has an appointee.
“We are seeking an actuarial analysis of the New York Governor’s recently proposed long-term stable contribution option (“Governor’s Proposal”) wherein the System’s Retirement Board would be authorized to establish a flat 12.5% employer contribution rate, which System employers could opt to pay in lieu of paying the actuarially determined normal contribution rate plus administrative rate,” the RFP states. “This flat rate would be in effect for 25 years commencing with the 2013-14 plan year.”
The RPF states the review must be completed by March 15—because the state budget is to be approved by April 1.