Many school districts in PA not named QCSD have handled their finances very well over the years, balancing expenses with their communities' ability to pay. But no good deed goes unpunished.
All 500 districts face a potentially disastrous tax increase in 2012-13 and beyond, totally not of their own doing. It is caused by mismanagement of PSERS, the Public School Employee Retirement System. You've probably heard the story. In 2001, state legislators gave themselves a hefty 50 percent pension raise, but used some clever accounting to defer the taxes to pay for it for 10 years - when many of them would have moved along to other positions. And they gratuitously gave 25 percent pension raises to all PA teachers, regardless of their level of performance.
And the next year, under pressure from the teachers' union, they added all PA teachers who were already retired. But there was no public outcry, because the public has no union, and we wouldn't have to pay the piper for a decade anyway. Well, the music is getting started, and taxpayers are going to be the ones without a chair when it stops.
The teachers' retirement fund has "defined benefits", providing guaranteed payments based on years of service, and salary level at retirement. Annual contributions by the employers are invested by plan administrators, but if those investments don't pan out - like in 2008, when PSERS investments fell by 29.7 percent - the teachers are still entitled to their payments, just as if the fund had actually turned a profit!!!. So that $4 billion loss has to be made up from somewhere. That somewhere is us - even though our own investments tanked too.
Starting in two years, school districts will be forced to bail out PSERS with a property tax increase equal to about 30 percent of the teachers' salaries. In QCSD, salaries make up about 60 percent of the budget. So, 18 percent (60% x 30%) of the total QCSD budget will be solely for PSERS payments. With a $90 million budget this year (likely higher in the future), that will be more than $16 million per year. Add to that the excessive annual five percent or more increases, and over three years we're looking at a minimum 33 percent tax increase (actually higher because of compounding), and increasing every year thereafter.
And of that 30-something percent, not a single penny will go toward improving education, or constructing new facilities, or maintaining cash-starved programs. It will simply put tens of millions of dollars into the pockets of retiring, and retired, politicians - and teachers. They will receive 75 percent of their pay scale at retirement for the rest of their lives. Quite a bonanza for folks who, you might say, need it less than others. Certainly the 52 percent of QCSD teachers who are already making over $80,000 per year (not to mention the dozens of retirees who earned that, and more), could live quite well with a little less.
Governor Ed Rendell has talked about refinancing the debt over 30 years, reducing the short-term hit, but adding to the overall cost. But the ultra-powerful State Education Association (translation: teachers' union) has steadfastly refused any proposal that might derail their gravy train, even for future hires. And school directors across the state have been acting like whipped dogs.... no one seems willing to show some cojones, and say "I'm mad as hell, and I'm not going to force this madness on my community".
No one, that is, except Haycock board member Paul Stepanoff. He has been urging his fellow QCSD directors to take a stand, and force the politicians who created this mess to actually suffer the consequences for it.
QCSD is facing an enormous budget deficit this year, and far greater problems in the future, even without the PSERS payments. So Stepanoff is taking a page from the Mahatma Gandhi/Martin Luther King playbook - educational civil disobedience. Just say no. Refuse to collect the PSERS money from the community.
Stepanoff points out that politicians, and the state teachers' union - not the taxpayers, nor the school boards - created the problem. Dollars spent on it have nothing to do with the educational mission of the schools. Therefore, PSERS should be a low priority, behind activities that benefit our students, and desperately needed building plans.
And because every legislator, and school administrator, stands to benefit from the increased pensions, they are all in a conflict of interest. Any recommendations they make regarding it should be understood from that viewpoint. Stepanoff believes that only a crisis, such as a statewide "tax strike", will force change: "The chances that the problem will be solved without a 'crisis' are zero. No legislators in this legally conflicted situation are ever going to vote to cut their own benefits. Therefore, the only way to solve the problem is either to create a crisis, or the Gandhi/Martin Luther King method of civil disobedience."
Stepanoff also has a practical suggestion for dealing with the teacher pensions. "Completely separate the PSERS educational bucket of money from the legislator's bucket. Treat the two as if they are two separate systems. Then there would be at least some hope that the legislators would take care of the educational side of PSERS. But I don't think you can create a problem involving four sets of stakeholders (taxpayers, students, legislators, and educators), then try to solve the problem solely on the backs of one group - the taxpayers (and perhaps the students, since some of their programs are being cut because of PSERS). That is completely and fundamentally unfair, but it is the only solution the educators and legislators are giving us."
Stepanoff has been trying to convince his fellow QCSD directors that by making any accommodations for PSERS in the budget, we are becoming enablers for the politicians in Harrisburg who created this problem in the first place. By doing their dirty work, we are just patting them on the backs and saying atta-boy.
"I want to make this as painful as possible for the legislators. I want the community to put the blame exactly where it belongs - with Harrisburg. I want to create a crisis by either not paying, or by having to raise taxes so much that the people are ready for a revolution. Admittedly, if we are the only one of 500 districts that doesn't pay PSERS, we could be in big trouble. But if we are one of 250 districts that refuses to pay - Harrisburg is in big trouble."
And Stepanoff has a plan for allowing our community to have the final say. "If we raise taxes above the Act 1 index by a huge amount next year, forcing a public referendum, then the good people of QCSD can decide if they should pay for PSERS, or not, by direct vote. Trying to solve the problem any other way, I am convinced, is a total waste of time. This will not be solved by lobbying, or by a letter writing campaign. It will be solved only by a 10 million strong mob that is ready to tear the legislators apart."
Those legislators created the problem, and now offer us only the solution of forcing 500 local boards to raise taxes beyond comprehension to bail them out. Enable their bad behavior. Give them confidence to continue that bad behavior for the future. But there now appears to be an alternative. As Gandhi said, "What we can do, we will try to do".