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Snow Graffiti at Canton Central School. Archive Photo of the Day: Lizette C. Haenel, Canton NY.
Snow Graffiti at Canton Central School. Archive Photo of the Day: Lizette C. Haenel, Canton NY.

How Cuomo's pension plan could help North Country schools

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It took a few days after Gov. Andrew Cuomo released his budget plan last week for many North Country school districts to realize they had a problem. The initial funding proposal didn't provide enough money to help them out of the budget hole.

But there's still some hope in the governor's proposal. His plan includes more than $200 million in what's called fiscal stabilization funding. The idea is to help schools with a spike in pension costs this year.

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Julie Grant
Reporter and Producer

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Canton Central School Superintendent Bill Gregory is having a tough year, and the regular state aid proposed in Governor Cuomo's budget isn't going to do much to change that. Gregory says the district will likely face a $2-million dollar budget shortfall next fall.

But the Governor's new stabilization fund could help with one of the biggest costs - payments to the state pension system. 

Gregory calls it a budget "wild card."

"We're still kind of hostage to the state, in terms of understanding what's going to happen with the $200-million dollars in stabilization money, and what are the contributions that the district must make."

Back in the late 1990s and early 2000s, most districts were paying around 1-percent of payroll costs into the pension fund. This year, it will be16.5-percent of teacher payroll.

Carl Korn says the rates skyrocketed because of the 2008 financial collapse. The state needed to make up for investment losses. Korn is spokesperson for the New York State United Teachers, which represents 600-thousand teachers, and other education-related professionals. 

"So school districts and taxpayers are essentially being penalized for Wall Street's recklessness."

Korn says pension rates are expected to spike for at least another year, and then they are expected to decline. 

"Now that the stock market is coming back, rates will stabilize and begin to go down. But we're now caught in that difficult period where rates are still high, and so school districts are asking for relief."

The Governor's proposal would allow school districts to smooth out pension costs over 25 years. It's like a fixed rate mortgage. Rather than adjusting the amount up or down depending on how much the state pension fund investments earn, districts would pay 12.5-percent into the Teachers Retirement System every year. If costs spike or drop, districts would still pay the fixed rate. 

The state comptroller's office still needs to approve the plan. 

Canton Central Superintendent Bill Gregory is looking into its impact on his district.

"We don't have the details regarding this, but there's some potential savings in the short term to our district, to the tune of several hundred thousand dollars."

Gregory says Canton Central needs that savings this year, because it's on the verge of going broke. 

But Stephen Putman says he wouldn't plan a school budget based on the governor's proposal. Even though his district, Brasher Falls Central, faces a million dollar shortfall in the coming school year.

"I think it's a really risky and tenuous proposition, and I think there's some serious doubts as to whether it's constitutional."

The governor has proposed a similar plan for local governments, cities, and counties. The Civil Service Employees Union has called it a bait and switch scheme, meant to underfund the pension systems under the guise of mandate relief. 

But the teacher's union hasn't taken a formal position.

Carl Korn with NYSUT says the union sees some possible pitfalls, but it also sees the need to provide relief to schools right now.

"By providing relief to school districts, school districts would be able to preserve programs, keep class sizes down, and avoid laying off teachers and staff, which would certainly be a positive."

The teachers union and other education leaders say the pension proposal needs a lot more study before schools could count on it to transition them out of the current fiscal crisis.

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