Chester Mummau: Twin Tiers Perspective: Pension crisis creates Groundhog Day scenario
Like the inevitable time loop in the movie Groundhog Day, once again we recognize that Pennsylvania's escalating public pension crisis has not gone away and that the General Assembly, like anchorman Phil Connors, has one more opportunity to relieve the growing burden on state and local school district budgets. Will legislators be able to break the cycle and finally enact meaningful pension reform?
Conversations about pension reform are not new. In fact, the issue has been debated over the past few years, even following the enactment of some initial fixes made under Act 120 of 2010. While there is agreement that the crisis continues to exist, and differing approaches have been suggested, no consensus has emerged. But taking no action, or suggesting that the problem will correct itself over time, cannot be an option.
Gov. Tom Corbett is preparing to unveil his 2014-15 state budget plan in early February. Likewise, school districts across the state have begun the task of crunching their numbers for next year's budget. Both the state and school officials must figure out how to pay pension obligations that continue to mount, 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. The contribution will continue to climb over the next 10 years to a staggering 32.2 percent by 2023-24.
Pension costs will continue to wreak havoc on state and local school district budgets. Short of action by the General Assembly to address this crisis, school districts have no option but to cover these soaring costs at the expense of the rest of their budgets. No district wants to raise taxes or cut programs as a way to deal with the huge increases in pension costs, especially given the length of time that we are projected to be in this employer contribution plateau. It won't be long before 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.
In the Wyalusing Area School District, projected expenditures for pension costs for the next school year are $1,930,436, an increase of more than $300,000 over last year. Because schools are a people-based operation, this rising cost will impact our district programs or staffing for the 2014-15 school year. We have not identified exactly how yet, but we know there will be an impact. We are doing all that we can to not take opportunities from our students, but even increased class sizes hurt students.
This Groundhog Day scenario cannot repeat for the next 10 years, or even for one more year. Time is of the essence. Pennsylvania's massive public pension crisis must be a top priority for the General Assembly in the coming weeks leading to the adoption of the 2014-15 state budget.
Note: Chester Mummau is the superintendent of the Wyalusing Area School District.