PA pension funds report major losses

Mark Scolforo summarizes the reports from Pennsylvania two statewide pension funds SERS (for state workers) and PSERS (for school district employees):

The percentage losses on investments were similar. The value of State Employees’ Retirement System investments dropped 28.6 percent in 2008, while Public School Employees’ Retirement System investments fell 29.7 percent. …

The state employees’ pension fund said the losses mean employer contributions could approach 29 percent of payroll by 2012, far higher than had been expected after its investments had generated impressive returns in recent years. For most people enrolled in the State Employees’ Retirement System, the government is their employer.

The teachers’ pension fund said it projects the spike could exceed 28 percent for the 2012-13 year. If that occurs, the pain will be felt most acutely by people who pay property taxes to fund school districts.

That represents an increase of about 6 times what taxpayers were paying this year, as the total taxpayer contributions for these pension plans will rise (by my quick estimates) from a little over $1 billion to about $6 billion.

Scolforo also gets it right when discussing the pension “spike”, one of my pet peeves:

Although it is often referred to as a spike, the higher rates in 2012 will more closely resemble the start of a higher plateau and are expected to usher in a lengthy period of much higher payments from taxpayers.