Chart: PA Pension Spike Delayed

After the passage of HB 2497 yesterday, assuming Gov. Rendell signs the bill, and it overcomes court challenges on its constitutionality, the dreaded pension spike will be merely delayed a few years. As the chart below illustrates, under current law, the state and school districts would be expected to come up with about $6 billion in pension contributions in 2012. Following HB 2497, this increase will be phased in over time—taxpayer contributions will reach $6 billion in 2017, according to PERC estimates.

The result is lower employer/taxpayer contributions through 2020, followed by higher contributions from 2021 to 2034. The net cost over that time frame is almost $7 billion—assuming an 8% return on investment, and no other changes to benefits, or further deferral of payments.