Type in the name of a school district to determine how much is being spent on pensions by the district. The numbers reflect the amount the district and the state pay for employee pensions. The data reflects spending in the 2014-2015, 2011-2012 school years and the percent change between those two numbers.
The current level of unfunded liability from Pennsylvania's two public pension systems for state employees and school district employees is over $50 billion, and in absence of comprehensive changes, is projected to reach $65 billion within 5 years. This unfunded liability is essentially a state debt owed to state workers and public school employees.
A few examples graphically illustrate the severity of the burden already being imposed under Pennsylvania's pension obligations and the disastrous consequences for Pennsylvania and its taxpayers if the Commonwealth does not take immediate steps to reform our state and school pension systems:
- The level of debt from our pension systems is increasing at a rate of $17 million every day. At that rate, the level of our pension debt will increase by over one-half billion dollars every month and by more than $6 billion every year.
- Taxpayer contributions to cover immediate benefits obligations of our pension systems will increase from $1.5 billion in the current year to $4.3 billion just four years from now.
- By 2018, pension debt will rise to a level equaling $13,000 per household.
- Just to meet the expected increase in total pension debt over the next four years, Pennsylvania income taxes will need to be increased by 36%. More likely, financing of this increased debt load will be largely met through increases in property tax.
Pennsylvania taxpayers will ultimately bear the burden of increasing deficits of the current public employee retirement systems through their tax dollars. The Commonwealth's growing pension obligations are crowding out funding for core governmental programs. Matters will only worsen, and worsen severely, if the General Assembly and Governor do not take immediate action to address this crisis.
PFB is urging immediate action by the General Assembly to pass effective and comprehensive legislation to reform the Commonwealth and school employee pension systems that:
- Quickly and effectively manages and brings down the current debt load of employer obligations.
- Requires new employees to participate in defined contribution pension plans at levels sufficient to prevent future increases in debt loads from employer pension obligations.
- Reflects more realistic levels of investment income in pension funds.