Can a school district/municipal government freeze contributions to the pension fund?
The simple answer is no. Currently, New York provides a defined benefit plan that is guaranteed by taxpayers. The contribution rate promised to employees upon entering the pension system is constitutionally guaranteed and as a property right, cannot be diminished. The pension system is funded by both employee and employer contributions. An employee contributes a fixed amount for a set period of time into his or her pension system tier. The employer then contributes the remainder of the contribution rate as determined by the pension system. For teachers’ that is the New York State Teachers’ Retirement System (TRS), and for other public employees the New York State Employees’ Retirement System (ERS).
The total contribution rate is based upon an actuarial analysis of a variety of financial and investment-related calculations. This calculation fluctuates based on market performance year to year. This leaves the employer, the local government, and the taxpayers absorbing a high level of risk as well as creating volatile budgeting cycles.