Pension crisis affects students, taxpayers
Pennsylvania's massive public pension crisis must be a top priority for the General Assembly this spring.
It will not be an easy debate, but the need to deal with escalating costs related to rising pension costs for state and school employees is critical. If not addressed, the pension crisis will have a crippling effect on the state's economy and a devastating impact on local school district budgets, as well programs and services for our students.
Both the state and school officials must figure out how to pay pension obligations that continue to rise, with the total employer contributions for next year's budget estimated by the Public School Employees Retirement System (PSERS) at $2.9 billion.
Beginning in July, the annual employer contribution rate that must be paid by the state and school districts will jump to 21.40 percent, up from the 2013-14 rate of 16.93 percent. In the Lehighton School District, expenditures for pension obligations for the 2014-15 will increase approximately $717,000.
School districts have few choices in dealing with this rate increase. Unfortunately, none of them are pleasant.
First, they can raise property taxes and no one wants to even contemplate how much taxes will have to be raised.
Second, districts can cut programs. However, pension costs are taking a greater and greater share of available revenues, leaving less funding for true basic education costs directed toward student learning.
It is impossible for most districts to cut enough to pay for the increase and maintain any type of education program that could be considered high quality. This means less money every year for direct classroom instruction and extra help for students, music, arts, sports, facilities and maintenance of our school buildings.
Slush Funds or Rainy Day Funds otherwise known as School District Fund Balance are also being used in some districts to balance budgets across the state of Pennsylvania. These taxpayer's dollars were allocated for future educational or building projects, now it appears they are used as a (PSERS) fund.
In 1997 the percentage for school district contributions to (PSERS) was 10.60 percent, decreasing to the all-time low of 1.09 percent in 2002. For the next nine years the rate fluctuated at an average of 4.73 percent; moving forward to 2012 the rate was 8.65 percent, 2013 - 12.36 percent, 2014 -16.36 percent and will be an extreme 21.40 percent for 2015.
Gov. Tom Corbett is preparing to unveil his 2014-15 state budget plans on February 4. The current system is unsustainable, and Pennsylvania's massive public pension crisis must be a top priority keeping our students, and our taxpayers in mind.