Pension Contributions Promise to Factor Big in Contract Negotiations

        The state pension system for school employees, PSERS, is broken, and the Upper Perkiomen School Board is asking for the public’s help to find a fix.

                “We are hoping to have the community work together with us to petition legislators,” said School Board President Harry Quinque Thursday.  “This should not fall on the local school districts.”

                PSERS is one of two state pension programs.  The other, SERS, serves state employees including legislators, judges and police.

                The crisis was always looming, officials said, because the system can’t support itself long-term.  The projected employer costs would eventually bankrupt school districts. 

                Employer costs skyrocketed after Act 9 was passed in 2001 which increased the multiplier used to pay into the pension by 25 percent. 

                Currently, how much the district contributes to the pension plan is based on the average of the employee’s three highest salary years and 2.5 percent times the number of years the employee has been employed.

                Coupled with the 50 percent increase to the SERS multiplier, voted in by legislators in 2001, a larger number of retirees, employer contributions that were previously too small and legislative deferrals in dealing with the problem, the crisis has come to a head.

                A faltering economy is also being blamed for reducing the plan’s assets from $67 billion to $45 billion due to investment losses.

                Under the system as it stands, Upper Perk will pay 8.22 percent into the pension plan in 2010-2011, an increase of $817,136 over this year.  That percentage will increase to 10.59 percent in 2011-2012 and will jump to 29.22 percent in 2012-2013. 

                It is projected that, by 2014-2015, Upper Perk will have to come up with more than $7 million over what it currently pays for retirement contributions.

                District Superintendent Dr. Timothy Kirby said a solution to the crisis will not be simple, but will likely be a combination of increasing the funding, decreasing the costs and deferring the liabilities of the system.

                In a power point presentation, Kirby noted the problem will prompt new taxes if a solution isn’t found.  He also said converting to a hybrid plan will not alleviate immediate funding concerns. 

                Benefit cuts are likely inevitable, and benefit enhancements are not likely, he added.

                Upper Perkiomen is currently negotiating a new teachers’ contract for 2011.  Talks began in January.

                “I think there was some school board involvement,” said Director George Bonekemper of the role of the local districts in the crisis.  He noted from 2001-2004, districts paid less than 4 percent into the fund.

                “But asking legislators to fix this is like asking a fox to govern your hen house...That was probably the worst piece of legislation ever passed in the Commonwealth.” 

                Quinque noted that Senator Bob Mensch (R-Montgomery, Berks and Lehigh) has already been enlisted to find a solution to the pension crisis.

                “As much contact with legislators as we can is going to be the ticket,” Quinque said, prompting the public’s involvement.  “This is a community and a district problem we need to work on together.”

                In other district news, the board approved an increase in the professional services contract for the artificial turf fields to Architerra, PC, from $39,800 to an amount not to exceed $60,000.  Facilities Director John Sheeran said the increase was due to additional services needed to address concerns by Penns-burg Borough and Upper Hanover Township.  Those concerns were not made public.

                The district announced the immediate need for an assistant track coach at Upper Perkiomen Middle School and Michael Tannous, director of the Freedom Valley YMCA, publicized an offer that gives all seventh-graders in the district free memberships to the YMCA for the year.