HARRISBURG, Pa. (AP) — A potential $140 million surplus in state reimbursements for Pennsylvania’s school district pension costs should be plowed back into the pension system to help cover the mushrooming taxpayer share of the costs, Democratic leaders in the Pennsylvania Senate said Monday.
The Public School Employees’ Retirement System has reported that shrinking school-district payrolls left $69 million in state reimbursement funds unspent in the year that ended June 30. Officials say the trend appears to be continuing this year and that the surplus could double by the end of the current fiscal year.
The state reimburses school districts for an average 56 percent of their pension contribution and, if payrolls shrink, so do the reimbursements.
Senate Minority Leader Jay Costa said any surplus should be spent over two years. He called on Republican Gov. Tom Corbett to reduce his proposed business-tax cuts or find other revenue to cover an increase in the pension contribution for hundreds of thousands of school and state employees that is expected to surpass $500 million for the first time in the year that starts July 1.
Costa, D-Allegheny, opposes Corbett’s plan to temporarily reduce state contributions over several years, which is expected to save $175 million to help balance the state budget next year. Starting in 2015, the plan also calls for reducing future benefits of current state and school employees to save $12 billion over 30 years. Labor unions have vowed a court challenge if it passes the Legislature.
Jay Pagni, a spokesman for the governor’s budget office, noted that Corbett unveiled his plan in February and said changes are possible as he discusses the details with key lawmakers.
“As we move through the budget negotiations, we’re fully aware that there may be ideas brought forth and we obviously would talk with the Legislature on those ideas,” Pagni said.
Sen. Vincent Hughes of Philadelphia, the ranking Democrat on the Senate Appropriations Committee, said postponing Corbett’s proposed reduction in the state capital stock and franchise tax would free up more than $360 million next year.
The state’s two major pension funds have a combined unfunded liability of $41 billion.