Districts combating pension issues

School districts are stockpiling funds for mounting pension obligations.

On the heels of Penn Cambria School District’s decision this week to enact a slight tax increase and a $680,000 reserve transfer to a separate fund for employee pension cost increases, Hollidaysburg Area cushioned its pension fund, as well.

At Hollidaysburg Area, where a preliminary budget tops $44 million, excess funding for special education transportation and new revenue from the sale of its administrative building have been transferred to an account for pension costs. But to say the school board’s approval of those financial transfers on Wednesday is a sign of financial desperation might not be accurate, according to Superintendent Bob Gildea.

“At this point, it is not a matter of desperation as much as it is preparation. We are expecting a continued rise in pension obligation and, like previous boards and administration, are trying to do everything in our power to prepare for that financial hit,” Gildea stated in an email.

One month away from a final budget adoption, no tax increase has been put on the table at Hollidaysburg.

Public school employee pensions are funded by a combination of state funds, invested funds and school district contributions. The system is underfunded, and school districts and the state are paying the price.

By the 2017-18 school year, the district expects its Public School Employees’ Retirement System rate to increase to more than $6.2 million. Even with the use of its account set up to defray that cost, Hollidaysburg Area projects that, without tax increases, it will have a deficit at the end of that year of $1 million, budget documents show.

The district has added about $2 million to its pension fund from the sale of the administration building and $291,000 from special education transportation funds that were in excess of the amount needed two years ago for a switch to a new transportation provider, Gildea said.

“Rest assured, we are still transporting all students as we always have.” Gildea stated.

Mirror Staff Writer Russ O’Reilly is at 946-7435.