Pa. lawmakers must get serious about fixing 2001 pension grab
Gov. Ed Rendell, facing his last budget battle with the General Assembly, remains committed to a significant increase in education funding for the 2010-11 fiscal year. He said last week that, if necessary, he again would be willing to wage a protracted fight like the one that extended 101 days past the beginning of the current fiscal year last July 1.
It would be uplifting to state taxpayers if Rendell also committed himself in his final months in office to actively pushing for a solution to the Legislature's pension grab of 2001 that gave lawmakers a 50 percent pension boost and provided for a 25 percent increase in teachers' pensions.
As currently projected, property owners across the commonwealth — thanks to the General Assembly's action of nine years ago, which came with the concurrence of then-Gov. Tom Ridge — will be facing a big spike in their school property taxes during the 2012-13 fiscal year to help pay for that pension grab.
It comes as no surprise that the Legislature and Rendell, gearing up for a budget fight amid incoming revenues well below last year's projections, aren't putting much emphasis on the issue. The governor and several bills in the General Assembly propose fixes, but those ideas remain in limbo.
But it's right to remind taxpayers that it was state lawmakers — who pushed for the 50 percent pension increase in 2001 — who ought to be getting serious about finding a way to markedly decrease the negative impact property owners are facing two years from now.
Meanwhile, Rendell, who has been fighting on behalf of increased education funding throughout his seven-plus years in office, ought to be fighting on behalf of another aspect of the educational picture — keeping the school tax bills out of the fiscal stratosphere.
As of now, that does not appear to be either on Rendell's or the Legislature's agenda. At the same time, the silence of Butler County's state lawmakers on the pension issue should not go unnoticed.
On June 2, Jeffrey Clay, executive director of the Public School Employees' Retirement System, spoke to the South Butler School Board about what lies ahead regarding the upcoming pension funding increase. At that meeting, Debbie Brandstetter, South Butler business manager, said if the current estimates hold true and the state doesn't step in to defuse the situation, the district would have to devote 9 mills of property tax revenue just to pay its pension obligation.
Such dire possibilities face other county school districts as well.
The 2001 pension grab received little discussion during that and subsequent years because most taxpayers either were unaware of the Legislature's action or, if they knew something happened, they didn't understand it, or its implications.
It was only during the past couple of years that the real story behind the pension grab filtered out to the taxpayers. And, only since then has there been any notable effort to explain the pending school tax onslaught on property owners, many of whom face the prospect of pensions dwarfed by what teachers will enjoy as a result of what was done in 2001.
More meetings on what's being referred to as the "school pension fix" need to be held at additional locations in Butler County. And, it shouldn't be just people like Clay who attend for the purpose of discussing what lies ahead. Lawmakers also should attend to brief school officials and taxpayers about what they are doing to make the situation more palatable — if anything.
"There's no magic bullet (to resolving the issue)," Clay told those at the South Butler meeting.
The state constitution prevents decreasing current employee benefits; that also means their contribution rates can't be increased.
Clay said possible solutions lie in delaying the spike in school district payments by changing accounting practices, and by changing the employer contribution rate to a gradual increase over time instead of a sudden spike followed by a plateau.
With the potential for a drawn-out budget battle looming and the possibility for more bad news regarding the state's lagging revenues, prospects look bleak for progress on the pension issue anytime soon.
But the time for multi-tasking must not be delayed any longer. Lawmakers must not forget the angry fallout from the 2005 middle-of-the-night pay-raise vote — anger that caused the raises to be repealed.
If nothing is done regarding the pension debacle, the mood in 2012 could be much worse, and local school boards won't escape that wrath, even though they weren't responsible for what happened in 2001.