New York's Precipitous Pension Plunge

New York's pension mess just got a whole lot messier according to State Comptroller Tom DiNapoli.

The fund lost $44 billion over the course of the fiscal year that ended in March, DiNapoli told reporters in a teleconference from New York City.

He agreed that the fund's nearly 29 percent drop from $153.9 billion last year to its current level of $109.9 billion was "startling," but insisted the plunge was inextricably linked to last year's stock market crash.

"It's certainly the worst year in anybody's memory," DiNapoli said.

The fund currently pays out pensions to approximately 350,000 retired public employees. The drop in value could have significant implications for local governments, who are required to make up any shortfall between what the pension fund is able to pay out and what their retirees are by law able to collect.

For that reason, DiNapoli said municipalities may have to increase from 7.5. percent to 11 percent the portion of payroll they set aside for pension costs starting in 2011.

The state's pension fund dropped in value by $44 billion over the past year. It's a 29% drop, and the obligations to 350,000 pensioners in the system have to be made up somewhere. That obligation is going to fall to the localities, which means more taxes are in the offing.

Amortizing the costs delays the inevitable and doesn't address the structural deficits resulting from an unsustainable pension system in the state.