PSERS time bomb: Tick, tick, tick, tick ...
The first real indication of just how painful Pennsylvania school districts' day of underfunded-pension reckoning will be for taxpayers suggests it will be painful indeed but doesn't fully reflect how bad the situation is.
The Public School Employees Retirement System (PSERS) is notifying districts that their pension costs will rise from 16.9 percent of payroll this school year to 21.4 percent for 2014-15. The Pennsylvania Independent says that rate could change a bit when it's finalized. But 21.4 percent would be the highest “since at least the 1950s.”
That quantifies the foolishness of Act 120 of 2010, which made this day of reckoning worse by putting it off, and by establishing “artificial collars.” Those allow state pension-fund contributions well short of what's actuarially necessary — while pension obligations grow by $3.9 million daily, one lawmaker estimates.
The key step needed to curb pension obligations' growth? Replace traditional, defined-benefit plans with 401(k)-style, defined-contribution plans for new school employees — which will require lawmakers to put taxpayers' interests ahead of teachers unions'.
Taxpayer outrage over school tax hikes and program cuts resulting from that 2014-15 spike in districts' pension costs should motivate the Legislature to do so. If it doesn't, taxpayers must express their outrage via the ballot box — by electing lawmakers with the guts to do more than kick Pennsylvania's pension can down the road again.