The $972,000 Pension Shortfall


Why did the 2013 budget, prepared in October, 2012 and approved by the Town Board on December 18, 2012, under budget the police and state retirement system payments by $972,000? 1

While we don’t have all the answers— yet — and won’t until more information becomes available, based on the information that is available, we know


·         the shortfall wasn't a 2011 problem, as initially stated by Supervisor Grace, and

·         the problem appears to be a 2013 budget issue


This is what is known as of April 26, 2014. 


1. The 2013 pension bill

·         These are the pension payments for both the police (PRFS) and state (ERS) retirement systems that were included in the General Fund 2013 budget —and what the required payments, due December 31, 2013, actually were.


                                                                  Budgeted        Required         Shortfall

Police                                            $1,600,000      $2,118,889      $518,889

State (General Fund) 2                  $1,100,000      $1,551,993      $452,993

Total shortfall                                                                                 $971,882



·         The 2013 pension bill was paid in full on December 13, 2013.


2.  The April 1, 2014 vote

·         More than three months after the pension bill was paid, the Town Board voted to cover the shortfall by transferring $971,882 from the fund balance.


·         Although some town employees learned of the shortfall as early as December 6, 2013, the councilmen were kept in the dark about the shortfall until the April 1 meeting.


·         When Councilman Patel asked Supervisor Grace to explain why such a large shortfall, the supervisor offered this explanation:


Basically in the 2011 warrant from NY State… there was a miscalculation and they rebilled us for the deficiency…. This was a 2011…was before I was here --- something I inherited. I’m going to make it very clear there was no error, no mistake made by anyone on the town board’s part or anyone in the town. This was the state that gave us the bill to pay. They came back last year and said opps we made a mistake to the tune of almost $600,000…. There was absolutely nothing she (the comptroller) could have done about it….both the retirement system and the police retirement system –they did a miscalculation in 2011…..


·         A review of retirement system vouchers for 2011, 2012, 2013,3  made public in response to a FOIL request, shows that the shortfall had nothing to do with 2011 but appears to be a 2013 budget issue. 


3. Pension system billing schedule for payment due December, 2013

·         In June and August, 2012, the retirement system provided the town, via email and on its website, with the projected salary numbers that would  form the basis for the 2013 pension payment calculation.


·         In September, 2012, the retirement system provided the town, via email and on its website, with the estimated payment amounts that would be due in December, 2013.


·          In November, 2012, the retirement system provided the town, via email and on its website, with the final invoice due December, 2013.


      4. What should have happened in Yorktown

·        In June and August, 2012, the town should have verified the state's salary information.


·         In October, 2012, when the supervisor was preparing his 2013 budget, he should have known what the estimated 2013  pension payment was based on the retirement systems reports of June, August and September. 


·         In November, 2012  before the 2013 budget was adopted Yorktown should have had the retirement systems final invoice due December, 2013.

5.What apparently did happen

·       The state's salary information was never verified.


·        Information about the estimated 2013 payments never made it into the 2013 budget.  Why is still being investigated.


·       Town officials say they have no record of having received any estimates from the retirement system. (None were provided in response to a FOIL request.)


·       When the Town Board discussed the pension shortfall at its April 22, 2014 work session, it was stated that no one in town had received any emails from the retirement system, and that one of the email addresses being used by the retirement system was that of the former comptroller.


·       It was not clear at the April 22 meeting whether, in the absence of receiving (or possibly reading ?) any emails, anyone in town checked the retirement system's web site for the payment information



6. What happens next

·        The town is belatedly checking with the retirement system to see if the salary information that formed the basis for the 2013 payments, and which was available to the town in June, 2012, is accurate.  Depending on the outcome of the review, the town could receive a credit on its 2014 pension bill -- or there could be a shortfall in the budgeted 2014 amount. 


·       The town is checking and updating both the email addresses used by the state retirement system as well as who in Yorktown has password access to the state system's website.


·         A FOIL request has been submitted to the state retirement system for printouts from its web site for the September, 2012 estimated payment, the November, 2012 final invoice, and the same documents for September and November, 2013 that should have been reflected in the 2014 budget.




1. Pension payments are based on the town’s total salaries, multiplied by the upcoming year’s pension rates.  The salaries are reported to the state by the town and in June and August the town has an opportunity to review the accuracy of the state's records. Also, because the town and the state work on different fiscal years, the state's initial "projected" salary figure is reconciled in the following year's invoice to reflect "actual" salary figures.  The state sets the pension rates, which are different for the police and state systems, and which are different for each tier of the pension system.  In 2013, the rates ranged from 11.4% to 33.7%. 


2. The state system covers employees whose salary and benefits are budgeted for in different funds, such as the highway, library and water funds. While the total state bill was $2.6 million, the 2013 state figures shown above are only for the general fund; there were no shortfalls in the budgeted pension payments for the other funds.


3. The November invoices for payments due the following December are from the retirement system’s web page. The revised format for 2012 and 2013 show both the increase in the total salaries as well as the increase in the pension rates. The dates on the lower right hand corner of the invoices appear to indicate the dates the information was taken off the retirement system’s web site.