I took the day off work today, and my wife and I went to the always-entertaining PES Halloween parade. Dr. McLaughlin, AKA the Admiral James T. Kirk, ably led the parade of costumed teachers and kids past hundreds of enthusiastic parents. The streets were lined with supportive faces, and attendance was so robust that a few cars had to park out on Pocopson road.
Following the parade, parents poured into the school to snap more photos and join the kids’ classroom parties. Parents provided the usual abundance of enticing snacks and drinks. On the second floor of the building, a wonderful bakery-like aroma made its way through the hallways. We finally tracked it back to Ms. Glod-Wetzel’s 3rd grade classroom, which had a waffle iron cooking hot waffles for the kids. Kudos to the homeroom parents who orchestrated that!
I saw many parents who had taken the day or morning off work to come to the parade, and to support their kids and the school. It is great to see such a high level of community support — parental involvement is a big part of what makes UCFSD successful.
In any crisis, it is hard to find a fully objective account of what happened. With PSERS, it is difficult, even with hindsight, to definitively determine the motivation behind key decisions, and to say who is ultimately responsible.
Nevertheless, there is agreement about much of what happened. So rather than wade into that controversy about who is responsible, I thought I would stick to the facts of what happened, and then provide links to the reports I found, some of which seem pretty objective, and some of which are less so.
In my last post in my PSERS series, I covered the basics of pension fund health.
Now that we have completed our review of pension fund basics, how is PSERS doing? As of June 2013, the fund was 63.8% funded. Or, stated differently, assets are 36% below what is required to pay out all of the benefits that have been promised and earned by participants. In dollar terms, the unfunded liability is $32.6 billion as of June 30, 2013.
Today was Parent Visitation Day at Patton Middle School. I was there, along with dozens (hundreds?) of other parents, to follow our kids through their daily class schedule. What a great way to see first-hand what our kids experience every day in the classroom.
Thank you to Principal Tim Hoffman, Jim Fulginiti, and the entire Patton team for opening up the building to parents, and for letting us see the great work that is going on at Patton Middle School.
So we have now covered how PSER contributions are determined, and we previously discussed how PSER benefits are calculated. Contributions and benefits come together in pension fund valuation and accounting! (OK, maybe not the most interesting topic, but so necessary to understand what it means when we say a pension plan is under-funded.)
The objective of pension accounting is to communicate the health of the pension program – will the money coming in to the program be enough to pay for all of the benefits that have been promised and earned by participants? While this is a simple concept, pension accounting requires estimations and modeling, and those come from actuarial science – a discipline that applies math and statistics to assess risk and to value assets and liabilities.
I have heard lots of discussion in our community about the potential redistricting of our elementary schools. Unfortunately, much of what is being circulated is rumor, speculation, or outright wrong. In this post I will respond to the rumors I have heard.
PSERS is funded by state, school district, and employee contributions to the fund, and the respective contribution rates are fixed by state law. Contribution rates are expressed as a percentage of the base pay of the employee. Local school boards have no authority to modify the rates or to defer payments. Rather, rates are determined by the PSERS board, based on recommendations from fund actuaries. That being said, the legislature (in its wisdom?) will override the actuarial model on occasion — for example in 2001.
Are our property taxes high in Chester County? What about the property taxes that are paid to UCFSD? Perhaps you have wondered how our taxes compare to national, state, and county averages. The Pennsylvania Budget and Policy Center, a non-partisan policy research group, recently published a report on Property Tax burdens in Pennsylvania.
Their key findings, as published in their press release , are:
My series on the Public School Employees Retirement System continues. See previous posts 1. PSERS – an emerging problem
2. What is PSERS?
Before we examine contribution rates, let’s examine the benefit formula. Once an employee is vested in the PSER system, a formula determines the lifetime annuity amount.
The formula is:
You will notice that the PSERs multiplier is either 2.0% or 2.5%. This is because PSERS actually has multiple classes of participants. In 2001 and again in 2011 changes were made to key program levers, such as vesting, contribution rates, and risk-sharing provisions. So employees with lower contribution rates / lower risk sharing have the lower multiplier, and employees with higher contribution rates / more risk sharing have the higher multiplier. (I am simplifying this, so if you are interested in the six classes of employees, please see the PSERS member handbook, p. 4 found here.)
So let’s work through an example. Continue reading
In a previous post, I introduced PSERS and the looming problem of an underfunded pension plan. In this post I provide basic information about defined benefits pension plans and basic facts about PSERS.
PSERS is the pension fund for public school employees, covering Pennsylvania’s 499 school districts, 28 intermediate units, 14 community colleges, and 4 state-owned colleges, 169 charter schools, 64 technical schools, and several other units. The Pennsylvania Public School Employees Retirement Act was signed into law in 1917, taking effect on July 1, 1919. The Public School Employee Retirement Systems (PSERS) exists to provide retirement income and health insurance for retirees of the state’s public education system. (Full history and plenty of other info is here.) Continue reading