Fleetwood Area School District Report: The Need for Pension Reform

Each February, school districts across Pennsylvania must approve a preliminary budget or pass a resolution that the district will not raise school taxes above the state determined index. The index is based upon a formula containing state-wide and regional wage data, along with specific district funding potential. For the 2014-15 school year, the Fleetwood Area School District’s index is 2.8%. Considering the low level of inflation, this initially sounds reasonable.

There is one expenditure, however, that continues to pose a significant challenge to school districts in their attempt to balance the budget. Public school districts across the state have been notified that the cost to fund the state mandated pension are increasing 27.52% for the 2014-15 school year. The state pays for a little over half of this increase leaving districts with a 12.7% increase. For Fleetwood, this amounts to an additional $387,689.00 for next school year. The contribution rate for school districts will continue to climb over the next ten years.

So how does a school district pay for a double digit increase in pension costs? For most districts, like Fleetwood, there is little growth in revenues such as from new developments and expanding job markets. This forces districts into the difficult position of either increasing taxes beyond the index (pension costs are a permitted reason for a school district to raise taxes beyond the index) or cut services/programs for students.

Only the state legislature, with the approval of the Governor, can change the pension system. Reform has been proposed numerous times in the state legislature. Some adjustments were enacted under Act 120 in 2010 although the costs continue to increase. As I am writing this article, Governor Corbett is preparing his 2014-15 budget plan that will be presented to the legislature on February 4th. I sincerely hope that the Governor and state legislature can agree on changes to the pension system that will control the costs while maintaining the integrity of pensions to employees who have given their lives to serve the children of this Commonwealth.


Upcoming Events in the Fleetwood Area School District

February 17th – Presidents’ Day – Schools Closed

March 1st – The Art Event, High School Cafeteria, Noon – 5:00 p.m.

The Board of School Directors will hold meetings on February 11th and 18th, both at 7:00 p.m. in the high school board room.

Dr. Paul Eaken is superintendent for Fleetwood School District.