PA school pension subsidy will nearly quadruple to $2.3B by 2012-13

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Specialist Arthur Andrews, foreground, works at his post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

New data from the Pennsylvania Public School Employees' Retirement System projects taxpayers' "employer contribution" to school teacher and administrator pension and retiree health care will nearly quadruple by 2012-13, to $3.2 billion, from $595 million this year.

Pensions for retired teachers and administrators are paid partly by investment profits, and partly by teacher payroll deductions; the rest is funded by state and school district taxpayers. Under the current subsidy formula, which takes into account investment profits and losses for the past several years, next year's contribution rate will go up only slightly, to 4.78 percent next year, from the current 4.76 percent, but the rate will make a "dramatic" increase in 2012-13, more than tripling to 16.40 percent, executive director Jeffrey B. Clay warned.

The actual cost will go up even faster than the rate, because the state expects teacher payroll to zoom to $14.1 billion, from $12.5 billion. Clay urged Pennsylvania school boards to set aside money for the increase now, despite the weak economy, because the state is losing money on its pension fund investments as values fall. 

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