Editorial: Public school pension headaches on horizon?

If you get — or will get — a pension, it is something to count on. It trades today’s loyalty for tomorrow’s stability in retirement.

If you don’t get a pension — and that’s most of us, in the era of the 401(k) — your association with them might only come from footing the bill for public employees with your taxes. Pennsylvania employee pensions have created a lot of headaches for taxpayers and officials alike in the last decade or so.

And nowhere is this felt more than when it comes to the hardest bill to swallow for many Pennsylvania property owners — school taxes.

In 2020, the State of Education report from the Pennsylvania School Boards Association looked at the finances of boards. It showed that for the first time in years, pensions were not the overwhelming budget pressure bearing down on local school government, though they are still in the top five expenses.

From 2010 to 2018, State Employees Retirement System and Public School Employees Retirement System costs grew year to year as state-mandated employer contribution rates ballooned. Reforms passed in 2017 gave some breathing room but didn’t erase the funding demands.

Many school tax hikes can be traced back to pensions. PSBA figures show an additional 34.5 cents of every dollar spent on salary costs is tied to them.

So it has to be alarming for school districts to hear that there could be problems on the horizon again.

The PSERS board issued a statement March 12 that said a mistake had been made that could change the contributions.

A consultant calculated 6.38% growth over the nine years ending last June 30. That was just a hair above a 6.36% growth number that would be the difference between retirement system members having a higher risk-sharing contribution rate come next July.

The PSERS board is investigating the error and has hired two law firms for guidance on what to tell the members about those contriubtions.

PSERS represents more than 500,000 active, retired and inactive but vested members. In a state with 12.8 million people, that’s essentially one in every 26 people. That is a lot of people relying on getting the math right.

Mistakes happen. They are understandable, especially if they are identified and the information is volunteered.

But we still have to deal with what happens.

No one meant to get Pennsylvania into a pension crisis when stock market upturns and downturns and government reactions to them tried to do the right thing for state workers. No one meant to lock school boards already facing issues with growing expenses and limited funds into escalating obligations.

There also is more than the pension money to think about. The pension crisis has bled out of school board and state pension issues, creating bigger budgetary problems. Pensions have been a huge part of the aggressive partisan stances in Harrisburg that have led to multiple budget standoffs in recent years.

The investigation needs to be done openly and honestly, and whatever next steps PSERS decides to take must be done not just with an eye toward getting the pensions right but minimizing damage.