The PSERS Crisis - Pennsylvania's Public School Employees Retirement System (aka the Pension Fund)

Friday, December 11, 2009 began what may be a catastrophic era for Pennsylvania taxpayers. The Board of Trustees of the Pennsylvania School Employees Retirement System (PSERS) voted to increase the employer contribution rate to 8.22% of payroll for 2010-11, a 72% increase from this years rate.

Those percentages will continue to climb, reaching a projected rate of near 30% of payroll by 2012-13 and are estimated to remain above 20% for nearly two decades. How much will school property tax bills increase in order to fund this projected spike and ensuing plateau? How could it harm our childrens education, our childrens school environment and other community programs?

PSERS is a governmental, mandatory, multi-employer, defined benefit pension plan for Pennsylvania school employees. It was established in 1917, and is one of the oldest public pension plans in the United States. There are currently 739 school employers enrolled in PSERS, serving more than 547,000 members, including those who are active, retired, vested and inactive.

A number of factors have led the system to the precarious fund balance position it currently holds. Government intervention, declining investment returns and the continued sluggish economy have all contributed to the dilemma. PSERS is funded from three sources: employee (member) contributions, employer (school district and state government) contributions and investment earnings. (The "employer" share is, of course, the taxpayer portion of the cost.)

While contributions on the part of both employers and employees have increased steadily, the investment income has suffered dramatically, especially recently. Legislation enacted that increased benefits and put off paying the bill until 2013 has also had a negative impact.

The crisis can no longer be averted. It's time to take action!

Category:

News & Politics

Tags:

• PSERS Crisis
• PSERS
• School Districts
• School Boards
• Public Education
• 2012
• PSBA
• PSEA
• Pennsylvania
• Harrisburg
• Pension Fund
• Keep the Promise
• Taxpayers
• Stakeholders
• Students
• Teachers