By Joseph Spector
Albany Bureau Chief
ALBANY When students return to school next week, it'll be with about 12,500 fewer teachers than in 2010, state records show.
The state's Teachers' Retirement System said the pension system had 273,328 active members outside New York City in June, a 4 percent decline from 2010 or 12,446 fewer enrollees.
The drop off is no surprise as schools districts across the state have cut jobs, left positions unfilled or offered early retirement incentives to deal with budget gaps.
Schools said they will return to classes with fewer programs, higher class sizes and less staff. The state earlier this year also implemented tougher standards for students and teachers.
New York State United Teachers, the state's teachers' union, estimates that there are 35,000 fewer school positions than there were in 2008. Also, despite recent increases, state funding to schools is below the 2009 level, and districts are grappling with a property-tax cap that limits revenue, the union said.
"The state's abandonment of its commitment to adequately fund education, combined with a very restrictive and undemocratic tax cap has forced school districts to lay off teachers and staff," said Carl Korn, a NYSUT spokesman.
The glut of retirements has had another effect: It has stressed an already underperforming pension system, forcing schools and taxpayers to pay more for teachers' retirements.
Between 1993 and this year, the Teachers' Retirement System paid out four times more than what it took in. The system received $17.5 billion in member and employer contributions during the 20-year period and paid out $73.2 billion in benefits.
The only thing that has kept the pension system solvent is that return on investments soared over the two decades: Assets jumped from $39 billion to $95 billion.
John Cardillo, the fund's spokesman, said the retirement system remains sound, saying it is "one of the best-funded plans in the nation."
"Incremental increases in the number of retirements does not materially impact the fund as the liabilities associated with members' benefits are advance-funded during their working careers," Cardillo added.
E.J. McMahon, president of the Empire Center for Public Policy, said the pension fund is being squeezed by an increase in retirees and an expected rate of return of 8 percent despite the economy's struggles.
An annual rate of return of 8 percent is too lofty, critics have said. The state's pension for 1 million public workers and retirees lowered its estimated rate of return from 8 percent to 7.5 percent in 2010.
"All you have to do is do the math," McMahon said. "Their benefit payouts double every decade. They think they are going to make 8 percent and they have averaged 5. Put those two numbers together and what you have is an added stress on taxpayers to make up the difference."
The rate of return was 2.8 percent in the 2011-12 fiscal year; 23.2 % in the 2010-11 fiscal year and 12.1 percent in the 2009-10 year. The return for the 2012-13 fiscal year, which ended June 30, has yet to be released.
Meanwhile, pension expenses for the state's roughly 700 schools have soared. The state Teachers' Retirement System in early August signed off on plans to increase pension costs 37 percent in 2014: from 11.84 percent of payroll to 16.25 percent of payroll.
The number of teacher retirements has surged. Retirements reached nearly 8,500 in 2011, up 50 percent from the prior year.
In 2012, there were 6,600 retirements, according to the pension system.
Active members in the teachers' retirement system does not only include active teachers. It includes teachers on leave or those no longer teaching but still in the system and not old enough to collect their pensions.
A review by Gannett's Albany Bureau last year found that the number of staff in schools, including teachers and administrators, dropped 4.8 percent between 2009 and 2011-- from 281,871 to 268,856, down about 13,000.
During the same period, student enrollment at public schools statewide decreased by nearly 19,000 students, or 0.7 percent.
Schools said they are still dealing with cuts in services and staff, despite a roughly 4 percent increase in state aid this year.
Gov. Andrew Cuomo has defended the state's funding of schools, and he has sought more accountability on how aid is spent, including a new teacher evaluation system. New York spends the most per capita in the nation-$19,076 per student, according to the U.S. Census Bureau.
He said Thursday: "Failing schools are not an option."
"In this state, we spend more money than any other state to educate a child. Period. There is no excuse for failure," Cuomo said in Lockport, Niagara County.
After years of cuts, though, programs are increasingly suffering, school officials said.
"We are starting to see things that are really going to affect kids and programs," said Lisa Davis, executive director at the Westchester-Putnam School Board Association.