Gov. Andrew Cuomo said his plan to allow municipalities and school districts to lock into pension rates could save Peekskill millions.
Cuomo said his Stable Rate Pension Contribution Option proposal could save the city and estimated $2 million in the 2013-2014 fiscal year and $7 million during a five year period. Westchester County would save $40.1 million in the 2014 fiscal year and $140.3 million during a five year period.
Cuomo said the plan which he announced during his budget presentation earlier this week, would allow localities to immediately access savings from the Tier VI pension plan by locking into a stable pension contribution rate that reduces near-term payments.
Districts and municipalities who opt in would avoid spikes in contribution rates, receive relief in the near future and have the ability better to plan for the future.
The total amount paid into the pension fund would not be diminished over the life of agreement, thereby maintaining the fiscal stability of the pension fund, according to a release sent out by Cuomo.
"The difficult financial pressures facing localities are well-known here in Albany, and my administration from day one has been committed to helping local governments meet their budgetary obligations as well as continue to provide critical services to their residents," Cuomo said in a statement. "While the Tier VI reforms were a major step toward helping local governments deal with the pension crisis, we understand that more help is needed. For this reason, the Executive Budget proposed the Stable Rate option to offer local governments and schools a bridge to the long-term savings of Tier VI, as well as greater predictability."
In an article that ran in the Times Union earlier this week, E.J. McMahon of the Empire Center for New York State Policy said he believed the plan will end up costing municipalities more money in the long run, especially as the lower-cost Tier VI pension obligations kick in during future years.
Stephen Madarasz, a spokesman for the Civil Service Employees Association, also voiced his doubts in the same article.
"It's like a wink and a nod, giving them an opportunity to put in less than they should," he said.
Correction: Governor Cuomo's pension plan could save the City of Peekskill $2 million in fiscal year 2014. An earlier version of this story said otherwise.