Once again, we are confronted with a series of myths and untruths that simply cannot go unanswered. So let me take a few moments to share the myth and debunk them.
Myth #1 – Enacting Tier VI will not do anything to lower the costs for local governments today, so why do it?
Answer: That is SOOO not true.
According to information gathered by the New York State School Boards Association:
- Overall teacher turnover rate is 13 percent.
- For teachers with less than five years experience the statewide turnover rate is 20 percent.
- Three out of 10 districts have a 25-percent turnover rate of teachers with less than five years experience.
- Ten districts have a 50-percent turnover rate of teachers with less than five years experience.
As schools hire new teachers, they would be placed into the new Tier VI retirement option. That means they chose between the reduced benefit defined benefit plan or the portable defined contribution plan. Either way, the cost to the school and thus the taxpayer is lower. So what does that tell us? By passing Tier VI now, you will be helping local governments start to control their pension obligation and thus stay under the 2 percent property tax cap and lower our tax burden.
Myth #2 – enacting Tier VI will hurt future workers.
Answer: Again, SOOO not true. In fact, it might help them and make taking the job more attractive.
Using the statistics above, none of those with less than five (or 10) years experience are able to get vested under Tier V. So they spend all this time contributing to their pension and never get vested. So when they leave, the only thing they get back is what they contributed…about 3 percent of their pay.
However, with the new defined contribution option under Tier VI, the portable option might be very attractive to them. Not only will they get back what they contributed, but they will also get the contribution from their employer. They can take it with them and invest it accordingly with a new employer or with an accredited investment advisor.
As you can see, enacting Tier VI is a win/win/win. Local governments win by starting to control their costs. Taxpayers win because local governments can live under the tax cap. And future employees win as they get more options for their retirement.
A recent Siena poll showed wide support from both non-union and union households for the passage of Tier VI. It is time for our state elected officials to listen to the voters and pass the budget to secure Tier VI and our future.