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Empire Center -- Pension Explosion Report

Empire Center -- Pension Explosion Report

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Published by: erikvsorensen on Dec 07, 2010
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12/07/2010

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Page i
EXECUTIVE SUMMARY
Public pension costs in New York are mushrooming—just when taxpayers can leastafford it. Over the next five years, tax-funded annual contributions to the New YorkState Teachers’ Retirement System (NYSTRS) will
more than quadruple
, while con-tributions to the New York State and Local Retirement System (NYSLRS) will
morethan double
, according to estimates presented in this report. New York City’s budg-eted pension costs, which already have increased tenfold in the past decade, will riseby at least 20 percent more in the next three years, according to the city’s financialplan projections.NYSTRS and NYSLRS are “fully funded” by government actuarial standards, but weestimate they have combined funding shortfalls of
$120 billion
when their liabilitiesare measured using private-sector accounting rules. Based on a similar alternativestandard, New York City’s pension funds had unfunded liabilities of
$76 billion
asof mid-2008—before their net asset values plunged in the wake of the financial crisis.
 
The run-up in pension costs threatens to divert scarce resources from essential publicservices during a time of extreme fiscal and economic stress for every level of gov-ernment. New York needs to enact fundamental pension reform to permanentlyeliminate the risks and unpredictability inherent in the traditional pension system.
www.CartoonStock.com
 
Empire Center for New York State Policy
Page
ii
 
ABOUT THE AUTHORS
E.J. McMahon
is a senior fellow of the Manhattan Institute for Policy Research andits Empire Center for New York State Policy. His recent work has focused on statebudget issues, tax policy, public pensions, collective bargaining, competitive con-tracting of public services and the fiscal record of the Pataki and Spitzer-Patersonadministrations. McMahon’s professional background includes more than 25 yearsas a senior policy maker and analyst of New York government. Prior to joining theManhattan Institute in 2000, he served as Deputy Commissioner for Tax PolicyAnalysis and Counselor to the Commissioner in the state Department of Taxationand Finance; Director of Minority Staff for the state Assembly Ways and MeansCommittee; vice chancellor for external relations at the State University of NewYork; and Director of Research for The Business Council’s research arm, the PublicPolicy Institute. His articles have appeared in the
Wall Street Journal
, Barron’s, the
Public Interest
, The
New York Times
, the
New York Post
, the
New York Daily News
,
Newsday
and the
New York Sun
, among other publications.
 Josh Barro
is the Walter B. Wriston Fellow at the Manhattan Institute, focusing onstate and local fiscal issues. He is coauthor of the Empire Center for New York StatePolicy's “Blueprint for a Better Budget.” He has also authored or coauthored Man-hattan Institute reports on property-tax reform in New Jersey, and on the nationalproblem of underfunded teacher-pension systems. Barro is a frequent television, ra-dio, and print commentator on fiscal and economic issues. He writes twice monthlyfor RealClearMarkets.com and has also written for publications including the
NewYork Post
, the New York
Daily News
, the
Star-Ledger 
,
National Review
, and
City Journal
.Prior to joining the Manhattan Institute, Barro served as a staff economist at the TaxFoundation, and worked as a commercial real estate finance analyst for Wells FargoBank. Barro holds a B.A. from Harvard College..Printed by:
Modern Press
Albany, NY

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