Transcript Document 7821056

Pennsylvania Education Finance
Symposium
A Look Ahead to the 2010 Budget and
Campaign:
What are the Education Finance Issues?
Jay Himes, Executive Director
PA Association of School Business Officials
www.pasbo.org
November 12, 2009
1
PSERS Total Employer Rate - % of Payroll
25.00
20.00
Normal Cost for 2008-09 = 7.3%
15.00
10.00
5.00
0.00
2
PSERS Total Employer Rate - % of Payroll
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
3
What Does It Mean?
•
•
•
•
Unacceptable property tax increases
Draining of state resources
Less local resources for actual instruction
Could get worse
4
What Does It Mean In Dollars?
• $2.5 Billion INCREASE
• Every 1% increase in the
PSERS Employer
Contribution Rate
means more than a
$100 million increase in
cost to schools and the
Commonwealth which
pays about 54% of the
employer cost.
5
What Does It Mean In Dollars?
• $1.35 billion state share
• BEF increase in 2009-10
was $300 million
• $1.15 billion local share
• Increase equivalent to
11% of 2007-08 total
property tax revenues of
all schools
• Many schools could see
15%-25% property tax
increases
6
Solutions
• Legislative action is a must
• Any change in benefit structure does not
provide short term benefits
• Everything has to be on the table
– Reamortization, multiplier reduction, hybrid plan
structure (Part Defined Contribution/Part Defined
Benefit), increase in vesting period, no return of
contributions, etc.
• Sooner rather than later
7
Implications
• Reduced state resources creating even higher
property tax increases
– SERS has a similar problem (est. $1.5 billion price
tag)
• More contracting out of support services
– Transportation, facility management and food
service operations
• Continued reduction of fund balance
8