The state’s pension system for educators has school district officials concerned about the amount of debt liability they are responsible for, which is many times greater than a district’s entire yearly budget.

Every school district pays money annually to the state Public School Employees Retirement System. But based on how many employees the district has, every district has a future liability to the state to pay those pensions, according to Tom King, solicitor for the Butler district.

The state, in turn, disperses the funding to the retired individuals.

The cost for these payments can be “gigantic,” King said, but these costs are out of the control of districts since the payments are governed by state law.

By a new state requirement, each district must record its pension liability annually during the audit process, with the 2014-15 audit recently reported for local districts. This liability represents the total amount of pension and benefits a district would need to pay if all of the current employees were to retire immediately, King said.

For the Butler district, the pension liability was at $131 million for the 2014-15 school year, said Deborah Brandstetter, the director of business services. In that same year, the district paid $8.9 million in pension costs, Brandstetter said.

The district’s operating budget that school year was $100.7 million, according to the audit.

The pension costs also continue to increase significantly each year, with the Butler district having a 46 percent immediate increase in costs in 2012, Brandstetter said.

“These are expense increases that are mandated by the state, and we’re hard-pressed to see any matching increases in revenue without raising taxes,” she said.

The Seneca Valley School District had a pension liability of $142 million during the 2014-15 school year, according to Linda Andreassi, director of communications. That year, the district paid more than $9.9 million in pension and benefits to the state, she said.

The district’s operating budget in 2014-15 was $108.7 million, which included a $1.5 million transfer from the district’s general fund to pay for increasing pension costs.

For the 2014-15 school year, the Karns City School District paid slightly more than $1 million to the state for pension and benefits for individuals who have already retired, according to Superintendent Eric Ritzert.

However, the district’s pension liability was $29.6 million, based on that school year’s audit.

“We don’t have that money, by the way,” Ritzert said. “It’s unsustainable.”

For comparison, the Karns City district’s entire operating budget for that school year was about $21.5 million.

At the South Butler School District, the pension liability was $43.2 million at the end of the 2014-15 school year, according to Paul Slomer, the director of business affairs.

Slomer said the district paid about $3 million for retirement compensation through the state in the past school year. The total operating budget for the district that year was $35.6 million, Slomer said.

In the 2014-15 audit, the Mars School District had an unfunded liability to the state of $50.7 million, having paid $3.6 million in that school year, according to Jill Swaney, business manager.

King said these liability costs are high, relative to the taxpayer base, and the real issue is that the state and the districts do not have this money.

“They’re going to run out of money eventually,” King said, calling the state pension system “almost a Ponzi scheme.”

The district’s debt services for future retirements are not payments they can reasonably make, according to King.

“No district in the state could pay what they owe,” King said.

Neil Convery, a member of the Butler School Board, works as the district office manager for state Rep. Brian Ellis, R-11th.

There have been multiple efforts to reform the state pension program, Convery said, with the topic being a large part of the discussion during the current budget impasse.

“There’s always talk about reform for the pension program,” he said.

Convery said the state is looking at ways to shift the cost burden more toward employees than taxpayers. Currently, the state’s full pension liability is close to $50 billion, according to Convery.

Despite attempts to alter the system, King said reform needs to happen sooner rather than later.

“They have to do something. Somebody’s got to pay it at some point,” King said.

Eagle staff writers Joe Genco and Paula Grubbs contributed to this report.