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By: Daniel Branda, Program Director – Affordability
Volatile pension costs drive the out-of-control tax increases we see on our school bills each year. At least that’s what we’ve been hearing from school officials since the implementation of the property tax cap.
But is it true?
According to the New York State School Boards Association:
“School districts in New York State are under more pressure than ever to improve student achievement while at the same time reduce the crushing burden of local taxes, prompted in part by skyrocketing personnel costs, including retirement benefits, over which districts and taxpayers have little control.
“School boards are keenly aware that pension contributions make up a significant portion of district personnel costs. However, these expensive plans, with volatile year-toyear [sic] costs, were designed with a workforce in mind that differs significantly from that within school districts today.”
Meanwhile the state’s Council of School Superintendents have been advocating that New York State change the property tax cap’s formula to exempt pension costs:
“To support more effective multi-year financial planning by schools, state government should … [p]rovide an exclusion for pension costs when they increase by more than 2 percent, rather than the current two percentage points.”
In fact, the tax cap alarm was sounded with last November’s warning that pension costs would increase in the 2018–2019 school budgets.
However, according to data compiled from the New York State Comptroller’s Office, actual pension spending by school districts (state retirement plus teacher retirement) declined .5 percent over the last five years — including a significant 26-percent decrease over the last two years.
But property taxes went up 7.4 percent in the same five years, including 3 percent over the last two.
While taxpayers are being squeezed when pension costs rise, it seems we’re not gaining any benefit when pension costs fall.
Note: The data provided by the Office of the State Comptroller excludes New York City. Total real property taxes include revenue from “Real Property Taxes and Assessments” plus “Other Real Property Tax Items.” Detailed account-level data through the 2017 school year is available at http://www.osc.state.ny.us/localgov/datanstat/findata/index_choice.htm