New Rochelle was recently informed by New York State that the City’s annual contribution to the state pension fund will rise by about $2.5 million, nearly a 30% increase from 2010 (which had already absorbed a 24% increase from the year before).

The pension fund for public employees is guaranteed by the State Constitution. In years when investment income is minimal (or, as is the case recently, negative) local municipalities are forced to pick up the tab.

As you can see in the accompanying chart, New Rochelle’s pension contributions have increased over the past decade by 7,551%. That’s not a typo. Pension contributions accounted for only 0.2% of the City’s General Fund expenses in 2001. Next year, pension fund contributions of almost $10 million will account for an estimated 9.2% of the City’s general fund expenses.

Because even Albany recognizes how much pressure their mandate puts on local budgets, state law this year allows municipalities to defer part of the increase by borrowing against the pension fund itself. While not the City’s preferred method of budgeting, we may have little choice this year but to take advantage of this option.