Friday, February 19, 2010

E-Mail of the Week

Rose Tree Media taxpayer William H. Evans writes:
The current method of funding public education in Pennsylvania is not sustainable.

School budgets are out of control; the pay and benefit packages provided employees is out of line with reality, regardless of union propaganda or wishful thinking.

Here is an example to check for yourself.

GoTo Click Pension Funding Rate Spike

Read 2010-2011 Employer Contribution Rate report and accompanying Projection of Contribution Rates

Note that the Total Employer Contribution Rate increases from 4.78% of employee wages to 8.22% for year 2011, to 10.59% for 2012, to 29.22% for 2013, to 32.09% for 2014, on so on, all the way out through 2039 where the rate is projected to be 14.64%

This means school districts will raise tax rates accordingly, driven by a wholly unrealistic assumption of 8% return on retirement fund investments, a history of underfunding the system and paying too great of benefits, up to 100% of the employees highest wage.

In 2009 the fund declined in value by 27%, while teacher wages and pension obligations have steadily increased at a rate greater than inflation. I estimate RTM school taxes will increase a minimum of 25% within the next 3 years just to keep even with the pension teacher union members guaranteed by the legislature and put into the state Constitution. On top of this is the fact that almost 15% of the district's budget goes to service its massive debt.

The essence, if you care to pay attention to facts rather than hyperventilating emotion is that RTM is operating on the brink of bankruptcy. Rather than enhancing your house value RTM has become a liability.

To resolve this will require huge tax increases that will inevitably push a great many residents out of their homes unless serious and sustained effort is given to reign in the costs for operating the school district, and every school district.

Unfortunately, there is no sign the current administration is willing to face this problem.

Some of you may be indifferent to this outcome but as the scenario plays out perhaps this attitude will change.
In other words, Wake Up taxpayers!


Blogger barnyard said...

Mr Evans writes a well thought out description of what Pa. taxpayers are all facing. We as employers of State, Municipal, and Teachers must convert existing pension plans to 401K's and get this Gorilla off our backs before the system goes down. Taxpayers can not pay premium medical plans along with pension plans as in the past.

February 21, 2010 at 11:28 AM 

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