$3.4 Billion Pension Problem for PA

An explosion in contribution rates for Pennsylvania’s two major public employee pension systems will likely dominate the Harrisburg landscape over the next few years.
In 2012, employer rates for the Pennsylvania Public Schools Employees’ Retirement System (PSERS) will nearly triple, to 29.2 percent.
PSERS executive director Jeffrey Clay recently told the House Finance Committee that will mean school districts and the state will need to come up with an extra 2.7 billion dollars.

"It’s unlikely both the districts and the commonwealth and school employers can afford these costs without significant and perhaps prohibitive tax increases at both the state and local levels. And that is the issue. I’ve been across the state talking to a lot of school districts. Every district says they cannot afford that rate of 29.22 percent. Something has to happen to resolve it."

The State Employees Retirement Fund is expecting a 700-million dollar spike. Finance Committee Chairman David Levdansky, an Allegheny County Democrat, says the good news is, lawmakers have time to examine the problem.

"We’ve got about a two-year window of opportunity here, that we need to act in a year or two. I kind of view this as laying the groundwork. That we understand the complexity of the problem that confronts us, and we start serious discussions and examine the alternative solutions that are being proposed."

But he admits the options aren’t pretty, saying they’ll involve “shared sacrifice.”