The $62 million ticking time bomb

As the NSB and NFT continue negotiating salary and benefits, there is one not-so-little issue that everyone better keep an eye on – The Public School Employees Retirement System, or PSERS. With the long anticipated hike in employer contribution rates almost upon us, Pennsylvania school districts are looking at rate increases from the current 8.65% up to 12.19% next year, and as high as 26.26% in the 2020/2021 school year.

Just how bad can it get for tax payers? Well, if you gotta ask . . .

Our district’s annual payroll for teachers is $50,202,222. Multiplied by the current employer contribution rate of 8.65%, this means Neshaminy’s contribution for this year will be approximately $4,325,000.

Now let’s just assume teacher salaries remained exactly where they are for the following 9 school years. Even with a flat payroll in 2012/2013, the increase in the PSERS employer rate means that Neshaminy’s contribution will jump by a little under $1.8 million to $6,119,650. And it gets worse as the employer rate jumps. By the 2020/2021 school year, the 26.26% rate translates into a $13.2 million contribution, which is $8.8 million more than what we are contributing now.

When you add it all up, over the following 9 years Neshaminy tax payers will be fitting the bill for a staggering $62,608,994 in increased employer PSERS contributions. And that’s assuming teachers don’t get any salary hikes between now and then.

Of course we could pray that Harrisburg comes up with some magic bullet fix to PSERS without bankrupting tax payers, but we cannot plan on that. So for now, every contract offer that increases teacher salaries must also be viewed in light of its potential impact on our employer contribution.

And in the midst of all this, we still have a school district to run.

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