The Daily Item, Sunbury, PA

Montour County

June 19, 2014

Pension reform under fire from Danville school district officials

DANVILLE — A proposed pension reform plan currently before Pennsylvania’s general assembly has been met with skepticism by the presidents of both the school board and the Danville Education Association.

The Pennsylvania School Board Association has endorsed the plan, however, as an alternative to the current “unsustainable” pension model.

The reform plan, by Rep. Mike Tobash (R-Schuylkill), “is extremely prejudicial against women and anyone who takes a leave of absence,” said Dave Fortunato, president of the DEA.

Under the Tobash “hybrid” pension plan, school employees would switch at certain stages between a defined-benefit system and defined-contribution, which acts similar to a 401K.

As an employee returning from an extended leave such as maternity is forced to go back to the 401K system, which costs the employee more money, the system is designed to punish people who go on sick leave or have children, Fortunato said.

The current pension plan is a defined-benefit plan that guarantees a certain amount of retirement money based on a salary percentage of a school employees three highest-paid years, Fortunato said.

Currently, all school district employees contribute 7.5 percent of their salary, with districts paying an increased amount each year.

The Tobash plan would also only cover future employees, which school board president Allan Schappert feels would make it too late to deal with the looming debt faced by school districts from state-mandated pension increases.

“It would have no immediate impact. Over time it would be beneficial. Would it be enough to overcome the continuing shortfall driven by PSERS? That’s arguable,” he said. “Personally I think by the time it fully kicks in you’d have a lot of schools being taken over by the state because they couldn’t operate.”

Schappert thought it would be “highly unfair” for current employees to be forced into a pension plan other than what they signed up for. He also said the Danville school board as a whole does not officially endorse one piece of legislation over another.

The Pennsylvania School Board Association has endorsed the Tobash plan as an alternative to the current “unsustainable” pension plan.

When it comes to the pension system, there are school boards across the state that can’t pay their bills said John Callahan, head of government affairs for the PSBA.

The Tobash plan offers a long-term solution in the form of the hybrid payment scheme, but short-term plans are also necessary to cover expenses for current school employees, Callahan said. Among these would be making financial “collars,” which could make the state-mandated increases to the current PSERS pension fund smaller and more manageable.

Under current regulations, PSERS contributions by Pennsylvania school districts to employees have been steadily increasing since the 2008-2009 school year, when the rates were 4.76 percent. The rates were 16.93 percent as of the 2013-2014 school year, with an expected jump to 21.4 percent for the 2014-2015 school year.

PSERS contributions have been a point of contention in the ongoing contract negotiations between the school district and the Danville Education Association. Back in March, a few weeks before a five-day teacher strike in April, Fortunato accused the school board of regularly deferring PSERS contributions to a later date over the course of several years, causing the costs to accumulate over time. Fortunato said the board was using the increased costs “as a crutch” to justify not increasing teacher wages.

Schappert said he was unaware of any deferred contribution costs and that the district was meeting its legal contributions regarding PSERS.

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