The Pennsylvania Public School Employees' Retirement System (PSERS) has boosted its annual surcharge on state and local taxpayers to 30 cents on top of every $1 paid to teachers and other school employees in fiscal 2016, up from 26 cents this year. State income and sales taxes and local property taxes will pay $4.1 billion to keep PSERS assets from falling farther behind future pension obligations in the 12 months starting July 1, four times more than school employees will contribute to their pensions.
The taxpayers' surcharge has increased from near zero in the early 2000s. The latest boost caps a string of increases under Pennsylvania laws designed by elected officials to delay pension funding in hopes of easing the rate of increase and also in hopes that PSERS' complex investment portfolio would generate enough profit to reduce subsidies.
The good news: the contribution rate for next year has now risen to "100% of the actuarially required rate" so the system's assets will no longer be falling behind its liabilities, as they have been most years over the past decade, executive director Glen R. Grell said in a statement.
In affluent suburban districts, PSERS payments are typically split 50/50 between the state and the school district. In Philadelphia and other districts where lots of poor people live, the state pays more than half. PSERS members contribute an average 7.5% of every dollar they are paid to their pensions. Long-serving Pa. teachers and administrators can retire with pensions worth close to their former net paychecks.