Hevesi said the villain – as it has been in numerous other public pension plans around the country – was the decline in the equity markets, which sapped the value of New York’s fund and has forced officials to put in more cash to help make up the difference.
The comptroller pointed out that the situation with the increased costs was only fair since Empire State governments paid nothing or virtually nothing to cover pension costs while the bulls were running on Wall Street. Hevesi’s pension announcement said “a large portion” of the New York fund was in equities. The projected 2004-2005 pension bills reflect costs of approximately 12% of payroll for the Employees Retirement System and approximately 17% of payroll for the Police and Fire System, Hevesi’s announcement said.
“For many years during the height of the stock market, New York’s governments paid zero or near zero percent of payroll to support the pensions of their employees,” Hevesi said in the statement. “This year’s increased costs bring governments’ payments to levels that are more consistent with long-term projected costs and with costs in other states.”
Regarding the current year’s bill, Hevesi said the state paid $396.3 million to the fund in September and has the option of putting off payment of the remaining $85.2 million until March 1, 2006. For the 2004-2005 costs, Hevesi said the state has to ante up by March 1, 2005. However, he said officials could opt to amortize over five years the part of the 2004-05 bill that exceeds 7% of payroll. If New York goes that route, Hevesi said the estimated payment due for 2004-05 would come down to $796.8 million.