New York State Teachers' Pension Payments (NYSTRS) should be NYS Tax Exempt, but TurboTax keeps calculating NYS tax on these payments. What am I mising

When you initially entered the Form 1099-R in the Income Section (Federal Return), after you enter the 1099-R, you need to select the right category as to where the 1099-R was issued from, to get it to flow to your NYS return properly and be tax-exempt.  This will be one of the subsequent questions that come up right after you enter your Form 1099-R.

When you select this (see below), it will flow properly to your NYS return as nontaxable.

Go back to your Form 1099-R in your Income section. Try to edit it.  You may have to delete and reenter it to get this question to pop back up.  

Click here for information on deleting your Form 1099-R in TurboTax.