Rep. Glen Grell (R-Cumberland) responded Monday to notices sent to school districts advising them that the projected employer contribution rate for the 2014-15 fiscal year will skyrocket to 21.40 percent.
Of that amount, 20.5 percent would be the employer rate to the Public School Employees Retirement System, while 0.9 percent would support the PSERS premium assistance benefit.
“Notices are sent to employers each year for budgeting purposes so that they can anticipate their annual pension costs,” said Rep. Grell. “The projected rate of 20.5 percent would represent the historic high-water mark for employer contributions. They have never been that high, yet the trajectory is still going up. If we don’t act soon, the rate will certainly continue its rise until it exceeds 31 or 32 percent.”
Rep. Grell said that the unfunded liability to PSERS and to the State Employees Retirement System are the driving forces behind the rising employer contribution rates and that the situation only gets worse with each passing day.
“Legislation must be adopted soon to address our unfunded pension liability in a meaningful way,” said Rep. Grell. “Our total liability of between $45 and $50 billion grows each day we fail to act. SERS calculates that its liability grows by $1.013 million per day, and PSERS calculates its liability increases by $2.9 million per day. This means the combined pension funding shortfall facing the Commonwealth grows by a staggering $3.9 million daily.”
“The unsustainable growth in the pension unfunded liability means substantial consequences will be felt in all 500 of Pennsylvania’s school districts,” Rep. Grell added. “It likely will result in staff cuts, cuts to programs, increased class sizes, property tax increases or all of the above.”Rep. Grell serves as a member of the Public School Employees Retirement Board and has proposed comprehensive pension reform legislation.