If not addressed, the pension crisis will have a crippling effect on the state's economy and a devastating effect on local school district budgets.
The current system is unsustainable, leaving taxpayers to feel the brunt of staggering increases unless a workable, long-term solution is enacted.
The problem facing the state, employers and PSERS is the sharply rising costs to the state and school districts to sustain the system. The employer contribution rate for 2013-14 is 16.93 percent.
This was a large jump from the 2012-13 rate set at 12.36 percent, which was a 42 percent increase over the 2011-12 rate.
The employer contribution rate is projected to increase sharply over the next several years, jumping to 21.31 percent in 2014-15, 25.80 percent in 2015-16, and to 29.15 percent in 2017-18. The rate will peak at 31.43 percent in 2034-35.
School districts have been in compliance with the law, but the system is unsustainable and must be fixed now. As the employer, school districts have been making the mandated required contributions to PSERS each year, despite the fact that increased pension costs are wreaking havoc on school district budgets.
School districts have few choices in dealing with the rate increases. Unfortunately, none of them are palatable.
First, they can raise property taxes. However, no one wants to even contemplate how much taxes will have to be raised in order to effectively deal with the huge increases in pension contributions. Second, they can continue to cut programs.
It is impossible for most districts to cut enough to pay for the increase and maintain any type of education program that would be considered high quality.
It's time to adopt school employee pension reform with the dual purpose of reducing projected employer contribution rate increases and reducing projected costs to school districts and taxpayers over the next two decades, while maintaining an appropriate pension benefit for school employees.
(The writer is the president of the Hollidaysburg Area school board.)