Brief Relief For WCSD
Pension payments less than previously thoughtBy LYDIA COTTRELL lcottrell@timesobserver.com
There is good news for the Warren County School District in terms of retirement fund contributions.
For now.
According to Jeff Lockett, member of the Warren County School Board of Directors (WCSB) and chairman of the board's finance committee, the district's contribution rate for the Public School Employees' Retirement System (PSERS) is lower than previously projected.
"Our contribution this year that was 8.22 percent is now 5.64 percent," he said.
The contribution rate of 8.22 percent was set by the Public School Employees Retirement Board (PSERB) in December as downturns in the market caused losses in the fund.
According to a December 2009 PSERS update, the fund held about $67.5 billion in June of 2007. A year later, the fund was down to $62.7 billion. Within three months, the plan had lost $8 billion. Three months after that, on Dec. 31, 2008, the plan was worth $45.4 billion, down another $9 billion. In that six-month period, the fund lost $17 billion - almost 30 percent of its value.
On June 30, 2009, the audited value of the plan was $43.2 billion - or about 20 percent short of being fully funded, according to PSERS. The fund rebounded to $46 billion as of September of 2009.
Despite the decreases in the fund, the board reluctantly passed a resolution to recertify the rate at 5.64 percent after lawmakers approved new fiscal code, Act 2010-46, with the most recent state budget
In a subsequent resolution, the board challenged lawmakers to find a resolution to the growing pension problem.
The resolution states, "Act 2010-46's directive to recertify the employer contribution rate undermines the PSERB's fiduciary responsibility to maintain a properly funded pension plan as required..."
For the WCSD, the effect is a brief sense of relief. At the 8.22 percent contribution rate, the district would have been on the hook for $1,045,025. The new rate has the district contributing $717, 024.
According to Lockett, the district gets a 50 percent subsidy from the state for the contributions.
"Essentially, it's a gross savings of about $300,000," he said. However, after the state subsidy cuts that amount in half, he added, "I'll take a $150,00 savings anyway I can get it."
While the legislative directive provides relief for this year, it is not a solution by any means.
"It is putting off the inevitable," said Rep. Kathy Rapp.
According to a projection of contribution rates distributed by PSERS in June of 2009, the leap from 4.78 percent in 2010 to 8.22 in 2011 was just the beginning. PSERB projected rates of 10.59 percent in 2012, 29.22 percent in 2013 and peeking at 33.60 percent in 2015.
"We definitely have a lot of concerns about the retirement system," Rapp said.
Rapp indicated that the State House recently passed a bill to potentially alleviate the concerns. House Bill 2497 changes the retirement age to 65, increases the vesting period from five to ten years and prevents lump-sum payment upon retirement.
"We will probably be to waiting to next session to address this issue," she added.
The looming concerns with the state retirement system is just a drop in the bucket of state fiscal problems.
According to Rapp, the state is $1 billion below the projected revenue. In addition, $850 million in federal funds the state was banking on will not be received.
In the midst of this, Rapp regarded Governor Rendell's allocation of $10 million to the Arlen Specter Library at the Philadelphia University and other pet projects as "disgusting."
"We are in dire straits with the budget," she added.
|
angry1
|
|
|---|---|
|
07-30-10 1:10 PM
|
Government employee pensions should have suffered equally as the people who lost theirs in private enterprise. The government has failed as miserably as any private business.
|
|
JerseyBoy
|
|
|
07-30-10 9:24 AM
|
Surprise - the WCSD raised taxes this year without justification and now the estimated expenses are down. Will they give the taxpayers their money back?
|
|
PlayBall
|
|
|
07-30-10 7:38 AM
|
Take a page from NJ Gov Chris Christie's play book.
|
|
Brutus
|
|
|
07-30-10 1:32 AM
|
Public employees and their defined benefit plans will bankrupt they system. Oh that's right, they will just require taxpayers to foot the additional bill. Get with reality, eliminate ALL defined benefit programs like most private businesses have had to do. We can not affort the health care and retirement programs of public employees, from local to state to federal, any longer.
|