Future Financial Clouds

Targeting Schools and Staff

A report prepared by the Citizens Budget Commission recommends cutting pension benefits for new government workers (a tier 5?) to hold down spending by local governments. The commission is a nonprofit budget watchdog that focuses on the finance s of New York State.

Among the problems identified in the report:

• The heavy reliance on local property taxes to finance public schools creates inequities in school resources and the burdens placed on local taxpayers.
• The state pays its public employees more on average that the workers of any other state, 30 percent more than the national average, and ranks second in the number of state and local government workers per capita.

As an example of inequities of inequities in school funding, the report points out that school districts’ average $13,000 per year per student, while the figure in Westchester County districts average $21,000.

If the state had implemented a 3 percent annual growth cap on the school property-tax levy per pupil in 1998, districts in 2005 would have spent had to spend $2.5 billion less – a drop of $1, 591 per pupil.

From 1995 to 2005, district expenditures went up $18 billion, or 72 percent. But average teacher salaries increased only 29 percent in the period, from $63,233 to $81,822. However, the cost of benefits – chiefly health insurance, pensions and Social security – shot up 97 percent.

Among the options the report identifies to cut spending by local governments is:

Establishing a new “Tier 5” level of retirement benefits for new public workers that would give them a 401(k)-style defined contribution plan instead of the current arrangement that guarantees a level of monthly benefits. Benefits of current workers and retirees wouldn’t be affected.

 Edited from The Reporter Dispatch, December 4, 2007