Taxpayers are beginning to feel the pain of the employee pension crisis consuming school district budgets as their own property tax bills increase and class sizes grow for their children.

And this is just the beginning, unless the school employee pension structure changes.

The state schedule for school district pension contributions calls for a yearly increase of 4.5 percent through 2015-16, when employer contributions reach 25.8 percent.

Afterward, contributions continue to climb until they reach 29.15 percent of employee salaries in 2018-19. They hover around 30 percent and 31 percent of salaries through the 2034-35 school year, when they’re scheduled to begin to drop.

Under this system, school districts pay the state the entire amount of the employer contribution before they are reimbursed 50 percent.

“I don’t think the school districts or the state government can get there (to the 30 percent rate),” said Jay Himes, executive director of the Pennsylvania Association of School Business Officials, called PASBO.

It’s just too much money, he said.

At the same time, there are no agreed-upon solutions, Himes said. On the revenue side of their balance sheets, property tax increases are all school districts have available to meet the payment schedule, Himes said.

Right now, 80 percent to 85 percent of districts’ local revenues come from property taxes, he said. Instead, he would like to see about 65 percent of local revenues derived from property taxes with the remainder coming, ideally, from a stable source of income.

The problem with sales taxes and income taxes, he said, is that they fluctuate with the economy, while school districts always have the same mission, the same expenses.

“We (PASBO) supported a change in future benefits for current employees in order to reduce costs,” Himes said, for immediate savings.

He doesn’t support the two-pension system pushed by Gov. Tom Corbett. Corbett wants to keep the defined-benefit plan for current school district employees and install a defined-contribution, 401 K-style, plan for future staff. That system would increase pension costs over the short term, Himes said.

State Sen. Scott Hutchinson, R-21st, is supporting legislation, SB 1079, which mirrors the governor’s plan and is currently before the senate finance committee.

“We can’t hide our head in the sand,” Hutchinson said, citing state actuarial figures which show the pension fund is $45 billion to $65 billion in the red, over the next 30 years.

Hutchinson said the two-pension-system would stop the bleeding, and would allow the existing pension fund to be shut down about 40 years from now.

“Most legislators believe something major must be done,” he said.

In addition, the governor’s 2013-14 budget includes $140 million in pension savings that result from the legislation, Hutchinson said.

If the legislation isn’t enacted, Pennsylvania school districts could find themselves with $140 million less in 2013-14 state education funding, he said.

“It’s going to be tough to get it done,” Hutchinson said about bill. “It quite possibly could come out of school district funding.”

Himes and Hutchinson agree that more staff reductions and program cuts could be the result if nothing is done to fix the pension problem.

For example, concerned parents confronted Butler School Board members at Monday’s meeting to complain about increasing elementary school class sizes and secondary school computer class cuts.

School officials agreed with parents’ assessments in principal, but made no promises.

By and large, Butler County school districts are dealing with the rising pension costs without input from Harrisburg.

For example, in 2013-14, the Butler School District will see a $1.8 million increase in employee pension costs, said Cathy Rodgers, director of business administration.

Once that amount is paid, the district will be reimbursed half, about $916,760 from the state Department of Education.

“Nine hundred and sixteen thousand, seven hundred and sixty dollars is considerable for us in one line item,” Rodgers said. “We’re not getting that increase in our revenue. It puts us in a difficult position,” she said. “It has districts asking if they need to apply for exceptions,” Rodgers said.

Butler may enact a 2-mill property tax increase to meet their obligations, raising the millage rate to 93.8 mills to help generate revenue for pension costs. A mill generates $1 for each $1,000 of a property’s assessed value, about $407,000 per mill in the district.

Butler’s millage increase would not go beyond the annual tax cap formulated by the state under Act 1 of 2006, the Property Tax Relief Act. But other school districts have sought relief through so-called “exceptions,” citing climbing pension and special education costs.

The Freeport, Seneca Valley and Slippery Rock school districts asked the state Department of Education to approve 2013-14 exceptions for those reasons. Whether the districts will tax property owners as much as the exceptions allow will not be determined until they pass their budgets in June.

In Freeport, for example, Buffalo Township property owners are facing a 5.9 mill increase that would increase the average homeowner’s tax bill about $118, said Bill Reilly, district business manager.

The millage rate there, 128 mills, is already the highest in Butler County.

“It’s not a simple fix now that they’ve established (the pension fund) this way,” said Reilly.

The district would allocate part of the millage increase to its construction of a new middle school, part to pension costs and part to special education.

“As long as pension costs keep increasing we have to apply for exceptions,” Reilly said.

In the meantime, the school district’s finance committee is looking for cuts it might make before the 2013-14 budget is approved June 12.