Demand Pension Reform Now, by Sean Carpenter

Demand Pension Reform Now, by Sean Carpenter

Published: May 1, 2012 at 7:46 am

It is no secret that the West Chester Area School District, along with 500 other Pennsylvania school districts, is facing falling income tax, home sale, and commercial property revenues.  At the same  time, expenses for items like fuel are rising, and more importantly our mandated pension costs are skyrocketing.

School boards across Pennsylvania are therefore facing huge deficits in coming years from the mandatory pension costs alone. The West Chester Area School District, which unlike many school districts started cutting costs three years ago and already reduced its 2012-13 budget by nearly $10 million, is faced with raising taxes to cover our forced participation in the state’s pension system despite these proactive steps.

Except for salaries, which in West Chester have been frozen since 2009-10, all the other factors impacting pensions – the contribution percentage, benefit amount, pursuing alternatives – are controlled by the legislature in Harrisburg. The State in effect dictates everything we withhold, everything we pay, and restricts us from offering alternatives.

Next year, the pension’s impact on our budget is $10.7 million. In each of the following years, it will be $14.3 million, $17.9 million, and $21.3 million, respectively. Funding to schools is bowing under the weight of the state’s obligations towards 50% of such pension costs. Contributions from state and local school districts will continue to escalate at dramatic rates and finally plateau for 20 years, according to projections.

We can all hope that real estate will rebound, and that the markets will boom.

Unfortunately there is no way to budget for hope. The only correction we can influence is in Harrisburg, by demanding real and permanent pension reform. In 2001, Harrisburg increased the benefit payout – including increases for themselves – and enhanced our reliance on market gains. The kick-the-can “reforms” since then only prolonged and enhanced the problems that the 2001 and 2008 recessions exposed.

Unfortunately many legislators, themselves in the pension system, refuse to address the biggest fiscal crisis facing Pennsylvania. They do not allow school boards the option to put new hires into 401(k)-style plans, which will offer predictable and stable costs permanently. Harrisburg’s lack of reform is risking our Commonwealth’s fiscal health, and those already vested in the pension system, by placing undue burden on the hard-working Pennsylvanians who necessarily support it.

State legislators must exhibit leadership, step up and save our school districts from bankrupting themselves and the taxpayers by addressing the decade-old payment now coming due. We need them to pass real and permanent pension reform, and we need it now.