The stock market is soaring, but somehow the city's public pension funds are not. The city is funneling millions of dollars to the fund after it has not met expectations two years in-a-row. Nonetheless, the city comptroller says not to worry. Our Courtney Gross explains.
They have something to cheer about on Wall Street. Just last week, the Dow Jones closed at a record high.
The city's finances, however, do not tell the same story.
"It’s not a good situation," said Mayor Bill de Blasio. "It’s going to cost the city a lot of money."
Days before that, Mayor Bill de Blasio delivered some worrying news.
The city's pension funds were not meeting expectations. The city would have to prop them up.
"It's going to be almost three-quarters of a billion dollars – $722 million over the next few years combined," de Blasio said. "So it’s going to be a real negative impact on our budget."
That's because the city's approximately $170 billion pension fund grew just 1.5 percent in the last fiscal year, which ended in June.
In fact, in three out of the last five years it has not hit its expected rate of return of 7 percent. Every year, that doesn't happen the taxpayers have to pick up the bill.
"We don't look at snapshots with pension returns we look at the long-term investment strategy," said Comptroller Scott Stringer. "And I am very confident when you compare our pension fund with others around the country we are doing very well."
The City Comptroller, who oversees the city's pension system, remains optimistic. Officials from his office tell us we can't just look at the record level stock market.
They say the pension fund's return on investment is lower because interest rates are low. They say the stock market has plateaued .
And they point to other large funds across the country. New York City beat California, Florida and New York State in returns last year.
"Obviously in a tough economy we continue to be vigilant and make sure we offer those returns," Stringer said. "I would argue that our pension fund is strong."
Some advocates do not see it that way.
The pension funds missed the target which is never a good thing for city taxpayers.
Officials say we should expect to see these types of returns for the next four to five years, meaning taxpayers are likely to be covering more.