Offering Benefits in a Downturn

By Naomi Dillon

It’s rare that the word “crisis” is used as it is intended -- judiciously, sparingly, and in proportion to the events at hand.

In Pennsylvania, crisis is an appropriate descriptor for a pension program gone awry: requiring districts to hike contribution rates from the current 4.78 percent to a mind-boggling 33.95 percent by 2014.

“For most districts, even if they cut to the bare minimum and raise taxes to where they dare not go higher, it still won’t be enough money,” says Tim Allwein, assistant executive director for governmental relations at the Pennsylvania School Boards Association (PSBA). “I don’t think there’s another state that’s suffering as much as us with this.”

Yet.

This year and beyond, more and more school districts across the country will struggle to meet their contractual obligations -- never mind their educational obligations -- as the compounding effects of the recession begin to threaten areas like public retirement and health care plans.

Once used in bargaining sessions and as bait to lure grads and career-switchers into the demanding but low-paying teaching profession, benefits like lucrative pensions and comprehensive health care plans are burdening districts. Costs rising exponentially year after year threaten to implode entire budgets for districts and even states.

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