This is my last post on the PSERS crisis. The series started here.
In order to properly fund PSERS, school district contribution rates will increase six fold from 2010 (when the fix was passed) to 2020 (when it is fully phased in.) What does this mean in dollars and cents for UCFSD?
In 2010, the employer share of PSERS was 5.64% of payroll, or $1.99M. Half of this amount was, by law, reimbursed by the State of PA. So UCFSD’s net PSERS expense was $0.99M, or 2.87% of payroll.
For this year’s 2014-2015 budget, net PSERS expense is $3.819M, or 10.7% of payroll. So in the last four years, our PSERS contributions have almost quadrupled.
In next year’s budget, next PSERS expense will jump to around $4.65M, or 12.92% of payroll. And in 2020, when the rates stabilize, net PSERS expense in UCFSD will be around $6.0M or 16.0% of payroll. (See chart below.)
As a school board director, I take tax increases very seriously. If I am going to raise taxes, I better be able to deliver a better product to justify any increase. Unfortunately with PSERS, this extra expense to the district is paying back a debt incurred over the past 10 years, and there is absolutely no present benefit. Nevertheless, the debt must be paid.
The Administration and the Board, however, have known this increase was coming for several years. And to their credit, surplus funds have been set aside in prior fiscal years and earmarked for 2014-2018 to reduce the amount of tax revenue needed in those calendar years. That is prudent management, and I am glad it was done. Nevertheless, we will still need $2.1M in new annual revenue (or offsetting expense reductions) between now and 2019 in order to pay our incremental PSERS contributions.
And the worst thing about this is that we will have to increase taxes more than we otherwise would want to, and we will have less money available to invest in initiatives that could improve student achievement. All because of some not-too-smart decisions made in Harrisburg in 2001.