New York Burns Through Cash, But Pension Funds Not Impacted

State retirement systems, in solid shape, don’t require subsidies from the tax coffers.

New York state may have come out of its March-ending fiscal year with more cash than it expected: a cool $8.9 billion. But Comptroller Thomas DiNapoli said it will hardly last through next month if the state hardest hit from the coronavirus does not get more federal aid. 

“The state’s strong cash position will quickly erode in the coming weeks,” DiNapoli said in a statement last week. “We must manage cash carefully.” 

One saving grace: The state government’s higher spending does not impact its retirement systems, which do not require a contribution from state coffers.

But the New York State Common Retirement Fund (NYSCRF) took a hit when markets tanked from the coronavirus in March. A plan spokesperson said last month that the fund does not expect to meet its 6.8% fiscal year target, despite being on track to do so the month before. Last year, the NYSCRF was 96% funded and worth about $210.5 billion. 

How much of a dip the portfolio has taken will be disclosed in the fund’s quarterly report in the coming weeks. But the impact may result in a change in contribution rates after the fund actuary makes his recommendations in September, a fund spokesperson said.

DiNapoli and other state officials have been seeking help from the Federal Reserve, as the pandemic has depleted governments’ tax revenues, strained state finances, and inflated obligations. Billions in New York aid have already been channeled to the state’s school and medical institutions.  

Otherwise, the state comptroller worried that governments will have to resort to recurring cuts or deficit financing. “The states and local governments most affected by this health and economic disaster require significantly more assistance and must get priority relief from Washington,” he said. 

Other state governments have already taken to borrowing to stay abreast of the crisis. On Friday, the Rhode Island treasurer said the state closed on $300 million in emergency credit to keep the government operational during the pandemic. Last month, he reassured pensioners uneasy about the financial climate that their pensions will not be raided. 

New York is the worst impacted in the US from the coronavirus. As of Monday morning, the state had more than 240,000 cases, nearly one-third the roughly 750,000 cases in the entire country. 

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