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Consolidate schools or not, Pa. pension crisis still looms

Prior to Monday’s vote for consolidation, 10 people addressed the Butler School Board with concerns or objections regarding the plan to close nearly half of the district’s 11 elementary schools. All 10 — eight were mothers of school-aged children — raised valid points for and against the consolidation, which will save an estimated $3.5 million annually.

It was the tenth speaker, Butler County Controller Ben Holland, who painted the most disturbing scenario of where Butler School District is headed financially — and why.

Holland, a former school board member, said income is not the problem. The board has raised the property tax rate by nearly 21 mills, or 28 percent, over the past decade, while the district’s total assessed tax base has increased by $127 million, or 42 percent; and the state has increased its total subsidy by nearly $11 million, or 35 percent.

But while more and more money has been collected, the district’s student enrollment has steadily declined. The trends aggravate homeowners — Holland called them “the silent majority” — particularly since only one is four households has a school-aged child, and that figure is trending toward one in five.

And “each homeowner must still pay property taxes,” Holland said.

No one should be surprised by Holland’s assessment that a public pension crisis is driving the financial woes in many Pennsylvania school districts.

The crisis traces its roots to the infamous “pension grab” of 2001, when state legislators substantially increased pension benefits for public school employees, made the increases retroactive to dates of hire and lowered the vesting threshold from 10 years to 5 years, expanding the base of eligible beneficiaries.

Fifteen years later, state public pension funds have amassed $41 billion in unfunded liabilities — the amount that the fund will owe retirees but can’t pay.

Statewide, school districts currently contribute more than 21 percent of wages in pension contributions — and that figure is projected to rise to more than 32 percent by 2024.

The crisis “is growing at exponential rates,” Holland told the board, “because Harrisburg is asleep at the wheel and has failed to correct a broken and unsustainable system.”

Without Harrisburg taking steps to correct the pension crisis, Holland predicted that some school districts will likely face bankruptcy; that the quality of public education will decline; and that many residents will no longer be able to live in their own homes because they can’t afford the property taxes.

Holland praised consolidation as a strategy to make the most out of limited resources to benefit the district’s students. He urged the board members to stay on the consolidation path.

“My concern, unfortunately, is that even a consolidation is not going to be enough,” Holland added. “The finances are just that bad.”

It’s incumbent on the board, he said, to approach consolidation as a way to cut waste, not to cut corners. It’s crucial not to lose sight of this overriding objective.

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