JACKSON TWP — The Seneca Valley School Board is exploring the option of committing $6 million from the district’s general fund balance to help offset escalating pension costs for the next eight years.

The board is expected to vote on that proposal Monday, at which time the board also is expected to vote on a proposed 2014-15 budget.

If approved, the board would commit $500,000 for the 2014-15 school year to help pay for pension costs.

Each school district in the state is mandated by law to annually pay a certain rate into the pension fund for its employees, known as the Pennsylvania State Employees Retirement System, PSERS.

Those rates are expected to climb significantly in the next four years before leveling off sometime around the 2019-20 school year. According to business manager Lynn Burtner, Seneca Valley is anticipating a $2 million increase in pension costs per year for at least the next four years.

Seneca Valley was mandated in the 2010-11 school year to pay a 5.64 percent rate into the pension system, which means the district paid $56.40 for every $1,000 of payroll.

However, that rate has climbed every year and has since jumped to a 21.4 percent rate for the 2014-15 school year, meaning that Seneca Valley pays $214 into the system for every $1,000 it spends on payroll.

According to Burtner, that rate could climb as high as 32 percent for the 2020-21 school year, which means the district would pay $320 for every $1,000 in payroll.

Burtner said the annual rate is calculated by actuaries in a formula that is meant to predict future earnings, economic conditions, and other variables.

The business manager said that if approved, the district would draw the $6 million from a general fund that currently has about $17 million in it.

The money committed to pension costs should help lessen the financial impact on the district of future pension cost increases. This, in turn, should help lessen any future tax increases.

Unfortunately, Burtner said, all of the numbers on a year-to-year basis are subject to change, which makes the issue even more confusing for school districts.

“These are just estimated percentage rates provided to us by the state,” she said. “They can be modified every year.”

If the school board votes to designate the $6 million, Burtner said the district would allocate $500,000 for next school year just for pension costs. That number would likely increase to $1 million for the 2015-16 school year.

The entire concept is to help lessen the blow of increasing pension costs, Burtner said, costs that continue to rise despite the lack of increased funding from the state.

Seneca Valley could be the first district in the area to plan ahead and set aside money for the pension crisis.

“Not to the degree of actually committing funds,” Burtner said. “Many (districts) are in theory talking about it, that it is their intent. But none in our immediate area have actually committed funds yet.”