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June 9, 2010

NY State Pension Fund asks County for 45% increase in 2011 Contributions

 Maragos calls on DiNapoli to recalculate Nassau’s share

 

Nassau County’s required contribution to the State Pension Fund is expected to skyrocket by about 45% or $43.6 million more next year. Comptroller George Maragos is asking for a full review and recalculation from State Comptroller Thomas DiNapoli. The County paid $96.9 million in 2010 and has been notified that the amount for 2011 will be about $140.5 million.

"Paying 15% of the County’s payroll to the State Pension System is astounding.  Demanding a 45% increase in pension contributions in just one year is unconscionable; more viable alternatives must be considered in tackling this problem,” Comptroller Maragos added. “We can not have a mandated system that leaves local governments with no alternative but to pay outrageous increases in contributions, without any recourse.”

The 2011 Pension contribution will be 14.9% of the total County payroll as shown on the attached table. The table also indicates that the County’s annual pension contribution as a percentage of payroll has been over 10% since 2005, an amount that should have caused concern and raised a red flag to both State and local officials.

"The Office of the State Comptroller must address the issue of escalating pension contributions from municipalities.  The impact of these consistent rate hikes on local governments and their taxpayers are devastating,” Comptroller Maragos added. “The seniority of the civil employees and the possible ongoing “sub” investment performance of the State Pension Fund can be expected to cause further demands from the State Comptroller for more and larger pension contributions in the future. This will have catastrophic financial consequences for the taxpayers in Nassau County.”

Comptroller Maragos emphasized that, “New thinking is required. The current Defined Benefit Plans and Defined Contribution Plans which place all or most of the premium burden on the local government are not sustainable. Moreover, double digit rates as a percentage of payrolls are unsustainable.”

PDF File Letter to State Comptroller Thomas P. DiNapoli

PDF File Table: Pension Contribution as a Percentage