It’s Philly’s mess, but the state’s left to clear the wreckage

By Eric Boehm | PA Independent

HARRISBURG — The Philadelphia School District looks as though it will open Monday, thanks to a last-minute $50-million loan secured by the city government.

CAN HE DO IT?: Gov. Corbett has tried, but thus far failed, to find a solution to the state’s pension problem.

But the stop-gap measure does nothing to address the larger problems at the School District, almost all of which will require action from the General Assembly in Harrisburg.

First and foremost on the list of problems: The School District’s pension funds, which will continue to drive up costs in coming years as decades of underfunding by the state — combined with higher retirement rates — blast the school district’s budget.

Pension payments will climb from $73 million this year to as much as $349 million by 2020, according to a new report from the Thomas Fordham Institute, a conservative education reform nonprofit.

But the district really is helpless to solve the pension mess, which was caused by state officials and can only be solved by state action.

Unlike local governments, which run their own pension systems in most cases,Pennsylvania public school employee pensions are handled by the state. And the Public School Employees Retirement System, or PSERS, is facing a nearly $30 billion unfunded liability, meaning it doesn’t have enough money to cover all of its promises.

While the situation in the Philadelphia School District is one particularly acute example, the same crisis is playing out — or will soon play out — in districts across the state.

So far, attempts to fix the pension mess have left much to be desired. Lawmakers made changes in 2010 to benefits for new hires, but that does virtually nothing to bring down the costs that have piled up during the past 10 years as state lawmakers deliberately underfunded the pension plans.

This spring, Gov. Tom Corbett backed a plan to cut benefits for existing employees along with further changes for new hires, but there is little interest in the General Assembly in going after benefits of those already on the job. That plan, certainly, would bring the full force of public sector unions to bear.

And it is unclear the Corbett-backed plan would be constitutional.

But one needs only to look at the mountain of costs hanging over the Philadelphia School District to know that something must be done.

A second major cost-driver at the School District is payments to charter schools. With more than 30 percent of the student population in Philadelphia now attending those alternatives to traditional public schools, the district is shelling out an estimated $533 million to charter schools, up from $126 million in 2008, according to Moody’s.

The state recently changed the rules for reimbursements to school districts for payments to charter schools, cutting off some of those payments.

Advocates of charter schools — including Corbett and many in the Republican majorities in Harrisburg — point to the fact that it is cheaper to educate a child in a charter school on a per pupil basis. The money should follow the students, they say, instead of being handed over to the district even as kids choose to be educated elsewhere.

And while all that may be true, lawmakers have spent much of the past two years in an on-again, off-again debate over further changes to how charter schools are structured and operate. Finishing a package of comprehensive funding- and accountability-focused reforms would be good for the charter schools and the struggling school districts where most of them are popping up.

The district has other problems to solve for itself — like a terrible bond rating, hundreds of millions of dollars in debt, and a decreasing student population — but it could sure use some action from our Legislature.

Contact Eric Boehm at [email protected] and follow @PAIndependent on Twitter for more.

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