School Budget: Pension Costs Skyrocket

Retirement costs are on the rise across the state, and the Hauppauge School District is not immune to the activity on Wall Street. Employer contributions into the teachers’ retirement system will increase by 37 percent, school officials said at a budget meeting Tuesday. 

In addition, the district’s contributions into the employee retirement system, which includes most non-instructional personal, will jump by 22 percent 

James Stucchio, assistant superintendent for business and operations, called the jumps “astronomical.”

There are 220 staff members in the district’s employee retirement system and 577 in the teachers retirement system. The rates paid into those systems are a requirement by law and cannot be negotiated.

“It hurts - absolutely,” Stucchio said of the roughly $2.5 million increase.

In addition to rising pension costs, the budget increase due to salary raises will be about 1.5 percent, the assistant superintendent said. Salaries and benefits make up about 80 percent of the entire budget, according to district officials.

Other benefit increases to come include workers compensation, social security, life insurance, unemployment insurance, disability insurance and medical insurance.

Last year, the district saw a 3 percent increase in health insurance costs. This year, the district will see an additional 8 percent increase. 

Stucchio said that it is unclear how the new federal health care system will affect the budget, but that he and other administrators are attending workshops to determine the consequences.

In total, employee benefits will make up one-quarter of the entire budget in 2013-14, which is a huge leap from years past. During the 1995-1996 school year, benefits made up 15 percent of the budget. In 2001-2002, they were responsible for 16 percent.

Why such a large jump? Much of it has to do with dismal economic investments.

“99 percent of it has to do with what’s happening on Wall Street,” Stucchio said. “If investments do keep taking off, it will help lower costs.” 

“It is important to note that Wall Street is in unprecedented territory now and that will, hopefully have an impact on the investments in the fund to lower the contribution rates,” he added. 

While the contribution rates are significant, they are less than in previous years. During the early 1980s, Hauppauge School District saw even higher increases.

Pension costs are expected to keep going up over the next couple of years, but a stabilization rate plan, recently passed by Gov. Andrew Cuomo (D-NY) may help balance those rates in the future. Both the governor and state legislature adopted the plan, but it is unclear how it will directly affect Hauppauge schools.

*Correction: This article previously stated that buget increase due to salary raises would be 11.5 percent. That figure is actually being raised by 1.5 percent.