Thursday, March 10, 2011

Social Security Reimbursement to Wealthier Districts also Cut

Social Security Reimbursement to Wealthier Districts Cut

The Governor's budget contains a "not-too-conspicuous" proposal to cut social security reimbursements to districts with aid ratios less than 50% (which would require a statutory change).


In the Subsidy Reductions by District spreadsheet cited yesterday from Harrisburg’s WABC website
http://www.abc27.com/Global/link.asp?L=479102 , column I has the heading “2011-12 Estimated SSR Reduction for MV/PI AR < 0.5000”.  

In my district, this would shift $719,524 in costs from the state to our local taxpayers.

Here's more on info on SSR, Social Security Reimbursement:

Definition:
STATE SHARE OF RETIREMENT CONTRIBUTIONS (Revenue Function  Code 7820; Funding Source 323) Revenue received from the Commonwealth of PA designated as the Commonwealth’s matching share of the employer’s contribution of Retirement Contributions for active members of the Public School Employees Retirement System.

The current year FY1011 gross retirement rate for PSERS is .0564. The state currently reimburses all districts 50% of the total gross PSERS cost. So a $50m payroll has a gross PSERS cost of $2,820,000, but the net employer (district) cost is only half the total cost, or $1,410,000, after the state reimbursement. All districts budget the PSERS cost at gross, and they also budget the state reimbursement subsidy as a revenue (function code 7820).

The governor's proposal would cut the currently required 50% state social security reimbursement for wealthier school districts.  The richest districts have a minimum aid ratio (MV/PI described below) of 15%.  In the example above, the state share of reimbursement would be cut from $1,410,000 to $423,000 for the wealthier districts.

Aid Ratios:
"Aid ratio" is a general term for three numerical values: (1) market value aid ratio (MV AR), (2) personal income aid ratio (PI AR), and (3) market value/personal income aid ratio (MV/PI AR).
Various state subsidies use aid ratios in their calculations.

The MV AR is used in the Pupil Transportation and School Building Rentals and Sinking Fund subsidies.

The MV/PI AR represents the combined market value and income wealth for each pupil in a school district.

The MV/PI AR is used in all other state subsidies that require an aid ratio

The higher the aid ratio, the poorer the school district. The lowest MV/PI is 15% and is applied to the wealthiest school districts

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