The proverbial chickens are coming home to roost.
For years, Pennsylvania has been dodging trouble on the state's underfunded pension systems, using a variety of methods to put off paying for the problems until tomorrow.
As a report at a Hollidaysburg Area school board meeting last week showed, tomorrow has arrived and at a very inopportune time given the prolonged sluggish economy.
Business Manager Sam Wilson told the Hollidaysburg board that the district's pension contributions are projected to rise from $800,000 to $2.9 million - nearly a fourfold increase - by 2016-17. That could necessitate a 2-mill property tax increase every year for five years, but even that would generate only half of the money needed.
Residents should expect similarly dreary news from other school districts as well, not to mention the state.
A pair of recessions combined with higher benefits and deferred contributions are to blame.
In 2001-02, state lawmakers approved a 50 percent increase in their pensions and a 25 percent rise for others without requiring higher contributions to cover the costs. And in 2003, lawmakers approved plans to defer some of the higher contributions needed to sustain the pension plans following the 2001 recession in hopes of better economic times.
Now following a second recession in less than a decade, Pennsylvanians face the ramifications of those decisions. The Public School Employees' Retirement System has an unfunded liability of $26.5 billion. The State Employees' Retirement System is $10 billion in the hole.
Making those pension funds whole is going to be a long, expensive journey.
Act 120 of 2010 helped deflect a huge jump in what employer were supposed to contribute to PSERS by spreading the liability out over 30 years, instead of 10. Without the change, the employer contribution rate on wages would have risen from 8.65 percent currently to 29.65 percent in the next school year. Instead, the rate will be 12.65 percent.
The bad news is the rate will continue to rise and is expected to peak at more than 20 percent in a few years and stay there for more than a decade, Capitolwire reports.
Since PSERS employer contributions are split between the state and school districts, the pension costs are going to be an ongoing headache for the foreseeable future. School boards likely will have to look at tax increases and spending cuts to make the budget balance, year after year.
The chickens have come home. But it will be taxpayers - not a magical goose - that will have to lay the golden eggs.
