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.