Is There a Pension Crisis?

PolicyBlog readers will be well-familiar with the fact that Pennsyvlania state funding for public schools is at a record high. 

So why do government union leaders and some politicians still repeat a lie about multiple-billion dollars being cut from public education? Simply put, in some cases they refuse to count state funding to school districts for teachers’ pension costs as part of education funding.

As the chart below shows, state aid to public schools for pensions has increased more than $1 billion since 2010-11 (this includes a $225 million transfer from the Tobacco Settlement Fund, not counted in the General Fund total).

State Pension Aid to Districts

Note that this $1 billion increase in state pension aid only covers about half of school employees’ pension costs. School districts have had to match this increase with a billion dollar increase in payments from local property taxes.

It makes it easier to say that “there isn’t a pension crisis” when you completely ignore a dramatic increase of more than $2 billion in public school pension costs. 

Unfortunately, that pension crisis is only going to get worse. Costs will continue to rise over the next few years. The required increases under Act 120 of 2010 are equal to about $900 per household. The costs increase for school districts for required pension payments would be the equivalent of laying off one out of every three teachers in the state.

The fact is this: We are spending more on public education than ever before (see chart below as a reminder of that), but more and more education dollars are going to pay off pension debt created by past political decisions.

State Education Subsidy 2-Color