School Districts Brace for Pension Crisis

Marion Herbert's picture
Tuesday, July 17, 2012

In five years, pension contributions for area school districts are projected to increase by $172.9 million.

With reduced levels of state funding and limits on how much districts can raise local property taxes, superintendents fear there will be one option: bankruptcy.

The recently passed 2012-13 state budget did nothing to address what many call the upcoming "pension crisis." From fiscal 2011-12 to 2015-16, contributions are set to triple. Area districts have already furloughed teachers, cut tutoring programs and increased class sizes.

It may only be the beginning.

The projected five-year increase for the 37 school districts in Lackawanna, Luzerne, Monroe, Pike, Susquehanna, Wayne and Wyoming counties is more than three times the $51.5 million that the districts saw slashed in the 2011-12 state budget and not restored for 2012-13.

It's a double-whammy, said Wilkes-Barre Area Superintendent Jeffrey Namey, and "the consequences are devastating."

"This thing is just going up and up and up," he said, referring to the pension increases.

The Public School Employees Retirement System is funded by three sources - employees, employers and investment earnings. Districts are currently reimbursed by the state for about half of their contributions. After the state reimburses districts, the five-year increase for the 37 area school districts will be more than $86 million. The state will need to find the money to make the reimbursements.

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