PSERS Contribution Rates set to increase 244% by 2013

PSERS has released its employer contribution rate that will be effective July 1, 2009. That rate will be 4.78 percent, a slight increase from this year's rate of 4.76 percent.

From the press release:

PSERS Executive Director Jeffrey B. Clay also cautioned that, while the latest actuarial figures support only a small increase in the contribution rate, school employers should continue to prepare for the dramatic employer contribution rate increase forecast in four years.

Mr. Clay stated that “while PSERS cannot collect employer contributions in excess of what is actuarially required by funding methodologies, some school districts on their own have begun to create a reserve in anticipation of the large rate increase projected in FY 2012/2013. Mr. Clay recognized the difficulty for school employers to create a reserve in the current economy, but stated “it would be very prudent for school employers to do so.”

Here is a chart of the expected contribution rates that was put out by PSERS. This chart outlines the projected rates of contribution all the way out to the year 2038. According to this chart, the employer contribution rate is scheduled to increase from 4.78 percent for 2009 to 16.40 percent beginning in 2013. That would be a 244% increase.

Last year the District spent roughly $2.8 million on these contributions, half of which were reimbursed by the state. In the District budget available online on page 68 you can see how much revenue Mt Lebanon received in reimbursement. Forecasting from today's numbers, a 244% increase would mean our contribution for the 2013 year would be close to $6.8 million of which about $3.4 would be reimbursed by the state.

Hopefully our state lawmakers will see this and make sure they do some leveling of the contribution rate before the huge increase.

Thanks for reading.

James