At the Tuesday, May 19, School District of Lancaster (SDoL) Board Meeting, the Board discussed a painful rise in District pension costs that will begin in 2012. That year, schools all across the state will experience a jump in retirement rates that will, in turn, demand that schools reciprocally increase their payments to the Public School Employees’ Retirement System (PSERS).
The crisis has been anticipated for years, ever since PSERS lost large portions of investment income after the 9/11 attacks. Needless to say, similar losses have lately become the norm. With less money available from other channels, it comes down to the districts to foot the bill for this mandated provision.
Matt Przywara, Chief Financial Officer of the SDoL, recommended that the district begin setting money aside in the 2009-2010 budget to prepare for the impending expense. Pryzwara acknowledged, however, that this would mean a tax increase higher than the recently projected 3.52%. Under Act 1, SDoL is permitted to raise property taxes by as much as 5.8% next year.
Pryzwara suggested that it would be most fiscally prudent to implement the full 5.8% increase: “Yes, I would recommend going to the highest tax rate to be able to…reserve those funds…. Politically, you as a School Board should make sure that taxes are reasonable for your constituents, and that we’re not just raising taxes to raise taxes.”
Superintendent Pedro Rivera acknowledged the value of such foresight, but explained his reluctance regarding a 5.8% tax increase: “Matt does recommend that we do that…. Because of our current circumstances, and where the city is terms of being in the midst of economic crisis, I just wanted to try to increase taxes at a minimal level. But you’re right, if we’re going to be responsible, we should build a reserve.”
At this point in time, both Przywara and the Board are hard pressed for a complete solution. Board President Patrick Snyder expressed the possibility of a scenario where the City could potentially assist in closing the gap: “We’re very in tune to the fact that what we do with the District actually affects homeowners and taxpayers far more than the City can. And that being said, [Lancaster City] has had a fairly amazing renaissance over the past five to six years. What we do can have a definite impact on that continuing, or stagnating, or declining.”
Board Vice President Michael Rowen asserted the sheer magnitude of the problem: “If we start saying publicly that we’re starting to build a fund balance for that, it gives the impression that it’s okay. And it’s not okay.” Rather, “When the PSERS increase really takes effect, with what they’re saying is going to happen, it’s huge….”
Snyder interjected, “It’s catastrophic.”
At a June 10 Work Shop, the Board plans to publicly discuss this as well as other budgetary challenges facing the District.
