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Pension change could cost districts

December 27, 2001

Pension change could cost districts



By RICHARD F. BELISLE / Staff Writer, Waynesboro


WAYNESBORO, Pa. - When the Pennsylvania Legislature passed a bill in May raising the pensions for retired teachers, it didn't appropriate money for local school boards to pay for the increase.

In the case of the Waynesboro Area School District, the move may cost taxpayers another 2 mills in their tax rates next year, said Jack Kennedy, the district's financial officer.

The district's annual contribution to the pension fund could go from $90,000 this fiscal year to $460,000 next year, Schools Superintendent Barry L. Dallara said.

The culprits, officials said, are the increase, from 2 percent to 2.5 percent in the formula that determines what retirees will get in their pensions, and the underperforming stock market in which most pensions are invested.

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State Rep. Pat Fleagle, R-Waynesboro, said when the legislature passed the bill raising the percentage in May, the Public School Employees Retirement Board said the pension fund was stable for the next 20 years. The board told the legislature that a half-percent hike in the pension plan would still make the fund viable for 10 years.

"That's what they told us. Now they're saying there may even be a deficit," Fleagle said. "Somebody had their figures wrong. They knew when we voted (for the increase) that the stock market was down. Now the local school districts will have to make it up. If there is a shortfall, it's incumbent on the state to help. I'm upset by this."

Fleagle said the legislature would take up the issue in the spring when it considers the state's budget for fiscal year 2002-03, which starts July 1.

Under the current 2-percent rate, a teacher or any school employee covered by the pension who works for 35 years would get 70 percent of his or her salary in retirement. The legislature raised the rate to 2.5 percent, which is what the local school districts have to make up.

The state, local school districts and the employees each pay one-third of the cost. The employees' share will also go up.

There are 475 employees in the Waynesboro Area School District, Kennedy said.

The district's current tax rate is 55.7 mills. One mill, which represents $1 for every $1,000 of property assessment, brings about $184,000 to the district's coffers, Kennedy said.

William Konzal, superintendent of the Tuscarora School District in Mercersburg, Pa., said taxpayers there could see an increase next year to pay for the higher pension premiums.

Officials at Greencastle-Antrim School District could not be reached for comment.

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