New Castle News


February 9, 2013

Local school districts analyze state pension reform



Stanley Magusiak, New Castle’s acting superintendent, commented that, “based on my limited knowledge of the bill, I can't imagine many educators would be happy about the changes.”

The proposed changing of the multiplier used to determine pension benefits, from 2.5 percent per year to 2 percent, caught his attention, he said, and another change would be in determining an employee’s final salary by averaging the employee’s last five years of compensation as opposed to the highest three, as it is now.

This is supposed to be happening on July 1, 2015, he said. “I believe these changes, among others, will help make up the minds of those educators (who) are deciding whether to retire or not.”

Shenango’ superintendent, Mike Schreck, said he foresees the governor having difficulty in getting his version of pension reform passed.

“It is obvious that something has to be done to fix the pension crisis in Pennsylvania,” Schreck said, “but I believe the governor is going to have a tough road ahead trying to pass this version of pension reform.”

According to Schreck, the district’s employer contribution to the system this year will represent an increase of 12.36 percent, which equals $988,906.

Acknowledging the school districts’ contribution rate for 2013-14 is set at 16.93 percent, that will make the district’s share about $1,381,383. That is an increase of almost $400,000 from this school year.


If the governor’s pension reform is adopted, it is anticipated that Shenango’s contribution rate would be 14.68 percent for next school year, which would mean an increase of only $209,000 from this year, Schreck said.

He noted that the 2013-2014 figures were calculated using a 2 percent raise for all staff.

With public schools receiving state reimbursement to help cover pension contributions, Shenango last year received 55 percent and this year, 59 percent.

Jennifer Conrad, Wilmington’s business manager, anticipates the state will provide districts with additional guidance as the proposed effective date for the changes nears and as more details of the governor’s plan are revealed.

“As I understand it, this is basically a complete overhaul of the retirement system that is going to require a great deal of discussion and deliberation in Harrisburg before a final plan is put into place.

“Obviously, the proposed plan is intended to benefit school districts and the state, while still offering state employees an expected level of retirement stability,” Conrad said.

Wilmington’s obligation for the 2011-12 school year was $718,862, and this school year, the district will pay about $1,013,000, Conrad said.

The district will have a new teachers contract for 2013-14 and 2014-15. Using current payroll figures, it’s estimated the district’s share will be $1,387,229, and $1,736,289, respectively, as its obligations stand right now, she said, without any change in the contribution percentage.


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