Gov. Kathy Hochul’s administration has agreed to pension changes expected to cost around $557 million annually affecting over 830,000 public employees statewide, that will also change the retirement age for teachers and lower benefit contribution rates for workers, NY1 has learned.
The budget agreement between Hochul and the state legislature would alter pensions for government workers included in a classification known as “Tier 6,” or those hired after April 2012, according to a copy of the deal reviewed by NY1.
Hochul’s proposal is slimmed down compared to a previous measure backed by AFL-CIO President Mario Cilento — one of the chief negotiators of the plan — that would’ve cost a total of $1.5 billion each year, including $249 million to the state and a $1.2 billion combined total to schools and localities.
Instead, the governor and legislature are expected to approve a plan that is estimated to cost the state $118 million each year and $440 million to local governments and school districts. The agreement is different depending on job title.
All public school teachers who hit 30 years of service will be able to retire at 58, instead of the current standard at 63 years old. While no other government workers’ retirement age is expected to decrease under the plan.
The powerful United Federation of Teachers President Michael Mulgrew praised the move, but said ultimately, the union wants to shave the retirement age down even further to 55.
“That was the major focus for us at all times,” he said in a phone interview with NY1 on Friday.
“Every public sector agency cannot fill its staffing needs,” Mulgrew added. “We’re not done. We knew [the] priority was the age right now, but we’re not done.”
The deal is also expected to lower employee benefit contributions for other government workers – not including teachers – to a range of 3%-5.75% depending on salary, amounting to a $244 million total cost.
It would also increase a cap on overtime calculated in retirement benefit from 15% to 25% of wages for those in the State Police and Fire Retirement System, and change the overtime retirement cap for other public employees from approximately $22,000 to $30,000.
Unions — in particular the United Federation of Teachers — have argued the changes would help attract and retain workers to the municipal workforce that typically boasts lower salaries compared to private employers but maintain generous retirement benefits.
Local government leaders have opposed the change, arguing it could burden localities already strapped by high costs and possibly lead to higher property taxes in the future.
The changes are expected to be included in the final state budget currently estimated at $268 billion, but that number could grow due to the additional spending.
