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Hearing held to discuss teachers retirement fund shortfalls


January 2010 Scranton/Wilkes-Barre/Hazleton edition of The Union News

Hearing held to discuss teachers retirement fund shortfalls


REGION, December 20th- According to the Pennsylvania State Education Association (PSEA) Union, which is the Commonwealth of Pennsylvania’s largest school employee union, new legislation touted as a solution to rising costs in the state school employee pension plans will not help and could actually increase costs to taxpayers.

“Instead of dealing responsibly with the pension spike, this legislation would actually add more administrative costs, and shift more of the burden of funding school employee pensions back to the Commonwealth. This legislation would make it even more difficult to balance the state budget over the next several years,” said James Testerman, President of the PSEA.

Legislation sponsored by State Representative Glen Grell (Republican-87th Legislative District) and State Senator Gene Yaw (Republican-23rd Legislative District), would change the current system of funding school employees pensions from local school districts to the state government.

Mr. Testerman testified before the state Senate Finance Committee on December 16th and told legislators that proposals such as House Bill 2315 would have no impact on Pennsylvania State Education Association members future employer contribution spike for the state and school districts in 2012. The Pennsylvania School Boards Association, which supports the legislation, acknowledged at the same hearing that future costs are “unknown” and that any savings would not occure until 2020.

“There are no easy solutions to look past such schemes and pledged PSEA’s assistance in developing a responsible plan to address the funding crisis and protect the solvency of the Public School Employees’ Retirement System.

Under a provision of the legislation, school districts contributions would be capped at their current property tax index and the PSEA stated the proposal would benefit wealthier districts over poorer ones, who would have to come up with a larger percentage of pension costs through local revenues.

Mr. Testermen stated over the last ten years, school employees contributed more than $7.3 million into the pension system while their employers, the state and school districts combined, paid about half as much.

“We now have to deal with the cost of two recessions, plus the impact of employer underfunding, all coming due at one time. This problem is unique to Pennsylvania. It was created by legislation and not by standard pension accounting,” added Mr. Testerman.

“Some of the solutions being discussed make for good sound bites, but won’t do anything to reduce the projected payment increase, and are actually long-term problems that will hurt our ability to attract and retain quality education professionals over the long term.”

The hearings were held to discuss the solvency of the Public School Employees Retirement System and the unfunded accrued liability rate of the pension fund expected to be more than 30 percent by 2012.

Mr. Testerman testified that lawmakers need to look past schemes that will not solve the pension crisis problem and pledged the PSEA assistance in developing a responible plan to address the funding crisis and protect the solvency of the Public School Employees’ Retirement System.

“There are no easy solutions, but one thing is clear, the state and school districts must keep their promise to fully fund school employees’ pensions,” Mr. Testerman stated.

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