Monday, March 28, 2011

A taxing solution

The comments have been flying fast and furious on a letter to the editor we published last week about teachers. I've caught grief about a couple of columns I've written about teacher pensions. On more than one occasion I have made it, or at least I've tried to make it, perfectly clear that this isn't about the teachers. It's about the never ending increases in property taxes to fund our public schools.
In the middle of it all, one thing is certain, the current system we have is simply not working for all concerned.
I threw out in today's column that we should go to a sales tax base for funding public education. I received the expected 'regressive tax' response from at least one reader. Of course, said reader didn't come back with an answer to the problem, just the complaint.
One reader, Frank Toner, did. I wish I had remembered it for my column, but since I didn't let's bring it up here and keep the conversation going. Frank reminded me that a few years back presidential hopeful Steve Forbes,, floated the idea of a flat tax. I haven't spent hours researching this to find out if it will work, as some of my readers think I should with every topic, so I'll ask you, will a flat tax work?
Is this a taxing solution?

Monday, March 7, 2011

Excerpt from my column: Unions must face pension crisis

It’s going to take a monumental effort for Pennsylvania to weather the storm that is brewing in the Pennsylvania Public School Employees Retirement System (PSERS).

I don’t think unions have to be busted to get it done, but union members do have to start paying more attention in class. And I would also appreciate it if every time some one brings up an idea that concerns unions that we don’t have to hear the Norma Rae, sweatshop, 20-hour workday song. We know the verses, and I don’t think any rational-thinking person would disagree with the lyrics. Unions were critical in the development of the industrialization of America. There were plenty of sweatshops in existence in this country, and there probably still are some, and reform was sorely needed.

Union workers make up less than 12 percent of all workers in this country, down from a high of about 36 percent. And out of that 12 percent, more than 35 percent are public employees.

There-in lies the rub.

My best guess is union bosses saw the writing on the chalkboard and decided their best chance for survival would be to go after public sector jobs like a fourth grader going after the last peanut butter cookie in the cafeteria at lunch time. They did, and we’re all being put into financial detention because of it; not because of the unions themselves, but because of their ability to hold hostage school boards across the state, and their ability to buy politicians like so many extra cups of ice cream.

I don’t blame the teachers. Who wouldn’t want a four, five or six percent raise every year, and after 25 years retire with at least 80 percent of your salary being paid to you for the rest of your life?

In the public sector it works a little differently, especially when it comes to school districts here in Pennsylvania. Teachers’ unions apparently have the ability to hypnotize school board members into giving them raises every year, convincing them that they should only have to pay a small portion of their health care with some magical swinging watch that tells them all they have to do is go to the taxpayers for the money to fund all of the above, including a plump pension that will more than take care of them for the rest of their lives.

In most private sector industries, pensions, as a way of providing retirement benefits for employees, have all but gone the way of the tetherball pole on the playground.

The math — and trust me when I tell you English was by far my favorite subject — even for me, it just doesn’t add up.

A report by the Manhattan Institute for Policy and Research issued last year projected the Pennsylvania pension fund to have a gaping $43.2 million hole. PSERS stated at the time that the hole was closer to $9 million. Either way, it’s a mighty big hole.

“The employer (school district’s) contribution rate (to the teacher pension fund) has been set at 8.22 percent for the 2010-2011 school year. This represents a 72 percent increase over the 2009-10 rate of 4.78 percent. The latest projections from PSERS forecast the employer rate to exceed 20 percent in 2013 and spike to almost 34 percent by the year 2015. Although the rate will begin to decrease in 2016, it will continue to exceed 20 percent until the year 2032.

This 19-year “plateau” of employer contribution rates greater than 20 percent would exceed a level of expenses for taxpayers, school districts and the commonwealth unparalleled in the 92-year history of PSERS.”

All because of stock market losses. This comes straight from the Pennsylvania School Boards Association as an explanation for how they’re going to fill that $43.2 million gap.

By the way, did the government bail out your 401k after the stock market crashed? No? I didn’t think so.

Check out how other states are dealing with the same issue,