PROVIDENCE — For the first time in years, state taxpayers have been spared a whopping increase in contributions to the pension fund for state workers and public school teachers.

Bottom line: state and local taxpayers are still facing a $397.4-million bill for the public employee pensions, with $249.6 million coming from the state and the balance coming from school districts. By way of comparison, state employees will be required to contribute a projected $61 million and teachers $97.9 million toward their pensions.

A report presented to the state Retirement Board yesterday suggests the state will have to increase its employer contribution by a relatively small amount — $ 1 million — during the year that begins July 1, 2009.

Double-digit investment returns in the last two years, including an 18.2-percent market gain in fiscal year 2007, have spared the state another steep increase, according to the actuaries from Gabriel Roeder Smith & Co. This compared to an average market return of 7.37 percent over the last 10 years.

With little debate — and no argument — the board chaired by General Treasurer Frank Caprio approved the new employer contribution rates that have provided a rare spot of good news in tough budget times for the state.

Public employee pensions are financed by three pots of money: employee contributions, which are frozen by law at 8.75 percent of pay for state workers and 9.5 percent for teachers; investment returns on the $8.51-billion pension fund and taxpayers contributions, which go up and down depending on how much the actuaries decide is needed to meet all of the state’s pension promises and obligations.

The state contribution rate for state employee pensions will drop from a previously approved 21.13 percent of an anticipated $701-million payroll during the year that begins on July 1 to 20.69 percent of a projected $717.3-million payroll the following year. The net result: the state’s dollar contribution will increase by a relatively small $300,000, to $148.4 million.

On the teacher side of the equation, the rate will drop from 25.03 percent on an anticipated $994.4 million payroll to 23.88 percent on a projected $1.042-illion payroll.

The net result: state and local contributions will increase by a mere $100,000 to $249 million, with the state paying a projected $101.2 million of that amount and the local districts, $147.8 million.

Rounding out this picture is a promise the lawmakers made in 2005 when they raised minimum age and work requirements for a pension for newly hired workers and those not yet vested. When the state’s contribution rate decreases, they agreed that 20 percent of that savings would be plowed back into the pension system to reduce its massive unfunded pension liability, a measure of how much more the state has promised than it has tucked away.,

In the year beginning on July 1, 2009, that would increase the state’s required payment to the pension fund by an estimated $631,259 for state employees and for teachers, $959,240.

And actuary Chris Conradi warned the state retirement board that there are so many unknowns heading into the next 12 months — including bad news on the investment front and a surge in retirements that will place new demands on the benefit system at the same time that the number of active workers contributing to the system drops due to layoffs, proposed “privatization” of state services and attrition. He put the board on notice that it might need to revisit the rates approved today sometime after Oct. 1.

A special House study commission, appointed by House Speaker William J. Murphy, was asked to look into possible cost-saving changes in the pension system, but the six-month legislative session is within weeks of ending with no recommendations so far from the panel, chaired by Rep. Timothy Williamson, D-West Warwick.

kgregg@projo.com