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Letter: Taypayers Group Has Not Blamed Teachers for Pension Problem

Letter writer Marilyn Reed responds to letter from Butch Santicola, field director and communications specialist for the Pennsylvania State Education Association.

Where do I begin?

Let me start by saying that one cannot have "wrong facts". You either have the facts or you don't.

Secondly, I want to make it clear that the group, Taxpayers Concerned in Pine-Richland (CPR), has not blamed the teachers of Pine-Richland or anywhere else for the pension problem, but we are striving to let people know that there IS a problem.

It really doesn't matter a whole lot whose fault this pensions issue is. Our anger and frustration is not really with the teachers, but with their union leaders and with the legislators who have put all of us into this mess.

I think that Mr. Santicola is basically correct about the rates teachers and employees are paying into their retirement. However, he is being rather misleading when he says that districts elected to reduce the rate that they contribute.

The law permitted a reduction in the amount that school districts could contribute, but for MANY years, this rate has been established by the Board of PSERS based on actuarial reports.

Back in the 1990s, the rate went to below 1% and has risen slightly ever since. The REASON for the reduction was a strong investment market that was supplementing the system. When that market crashed, (and many of us NON-government union members lost a lot of their retirement, while taxpayers were still required to pay for public sector union pensions) the problems of not funding the pension plan at an appropriate level began to escalate.

As a wise man explained to me recently, the real elephant in the room is the FACT that the plan is a defined benefit plan and not a defined contribution plan. The formula used to derive a retiree's pension for the most part has no regard for how much they contributed to the plan over the course of their career.

Regardless of all of this, the situation we are faced with is that we are being told by the legislators and the unions that "there is NOTHING we can do about this" contract. So we are stuck paying for these very cushy pensions for the retirees.

The only things that I see the taxpayers are left to do are:

1) put pressure on legislators to make sure that future public sector union members be required to have defined contribution plans and

2) keep pressure on their school boards to refuse teacher pay increases and insist that they pay more for their own health care.

These would seem to be the only things the taxpayers can do to control the costs and to keep the school districts from going bankrupt, unless of course, the union wants to vote to change their pension plans to more reasonable ones.

Most taxpayers don't even realize that most likely a tax increase of 43% will be needed to pay for the jump in pensions next year. (http://triblive.com/opinion/editorials/2137862-74/tax-budget-business-cuts-state-fiscal-forced-increase-necessary-quibbles )

Taxpayer CPR plans on working on both 1 and 2 and educating the taxpayers on this serious issue that is sweeping not just across our state but even across many parts of our country.

 

Marilyn Reed

Taxpayers Concerned in Pine-Richland

Richard August 20, 2012 at 07:46 PM
Marilyn- So the teachers can vote to change their pensions? I thought that was set by the state's legislature and not the PR union. Am I missing something? The defined contribution pension system seems like the way to go. However, a number of states that switched to a defined contribution plan have switched back in the past 5-10 years. Also, from what I understand, districts were given an option to DEFER payments into retirement not a reduction without any future payments during the last decade. So you want to freeze pay for teachers (not a bad idea), did you say the same for support staff and administration that just got a 2-3% raise over several years? They are also tied to the PSERS system.
Daniel Carey August 21, 2012 at 04:40 AM
Switching new employees to a defined contribution plan will only make the problem worse - and now you will have a cadre of new employees NOT paying into the system, while current (cushy? - really??) pension costs continue. Other options for taxpayers - put pressure on the legislature to close the Delaware tax loophole and enact fair severance taxes on Marcellus shale extraction.
Parent #2 August 21, 2012 at 12:47 PM
Daniel- you are wrong. The existing "system" will remain with existing beneficiaries. New employees would be part of a new system that is a defined contribution plan. They would not have to fund the existing hole that exists.... That would essentially be a pyramid scheme. Did you know that only 21% of the pension shortfall is due to taxpayer underfunding- according to PSERs? This notion that the funding gap falls solely on the shoulders of the taxpayers (er-school districts) is a distortion of truth. A DC plan should be created for new employees and the existing DB plan should be reformed in a meaningful way. Politics should be removed from this discussion, but unfortunately that is all that public pensions are about. One more thought- the taxpayers get screwed when there is a shortfall (underfunding) and are asked to make up the difference. What happens when the pension is overfunded? Who benefits? Certainly not the taxpayers. Total reform is needed before thits tsunami hits.
Parent #2 August 21, 2012 at 01:01 PM
Daniel- another contributing factor to the shortfall (besides major investment losses) - Act 9. Google it.

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