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Upper. St Clair withholding PSERS payment until state budget is passed

By Terry Kish 3 min read
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Upper St. Clair’s school directors decided to send a message to state officials: get the state’s financial affairs in order if they want local school districts to do the same.

At the Sept. 21 regular board meeting, the board voted to authorize the director of business and finance to withhold 100 percent of payments to PSERS (Public School Employees Retirement System) related to the employer’s obligations, but not the employees’ withholding, and withhold 24.1 percent, representing the portion of the 2015-16 budgeted revenues from state and federal sources, of payments due to charter schools, commencing immediately and continuing until a 2015-16 state budget is adopted into law.

The motion, which was made by Harry Kunselman and seconded by Rebecca Stern, was approved in a 7-1 vote. Lou Oliverio cast the “nay” vote, and Buffy Hasco was absent from the meeting.

The decision to withhold funding did not come without considerable debate. Stern said that while the Upper St. Clair School District could function without state funding for most of the school year, other districts across the state were already being affected.

“We’re a leader here,” said Stern, adding that Harrisburg had not done its job and needed to be held accountable and produce a budget.

Board member Barbara Bolas said withholding payment sends a very strong message that the state needs to pass a budget before local districts can pass their budgets.

Oliverio questioned the effect withholding the PSERS payment would have, both from a financial and legal standpoint.

Upper St. Clair’s director of business and finance, Frosina Cordisco, said PSERS has notified school districts that it expects on-time payment of the local share of employee pension contributions by Sept. 23 or delinquent school districts may be assessed interest of up to 6 percent.

Cordisco said that the district’s September payment is $872,900. A 6 percent penalty would equate to $143 per day, or more than $4,000 a month in penalties.

Kunselman said after hearing from the board’s solicitor and reading the PSBA (Pennsylvania School Board Association) attorney’s opinion, he thought there was a defensible legal position for taking this action.

The PSBA website provides a “legal analysis explaining why it is lawful for school entities to take two particular stop-gap measures for addressing the cash flow pinch caused by the commonwealth’s ongoing budget impasse: Delaying payment of employer contributions to PSERS; and delaying payment of the portion of charter school tuition otherwise owed that represents the proportion of total budgeted revenue received from the Commonwealth.”

Oliverio said he was “troubled” by what the vote was telling taxpayers, adding, “It’s imprudent to do this to make a political statement.”

Oliverio also cautioned the board that if the state budget impasse continued for any length of time, penalties could add up to a significant sum.

Stern said the board was not being negligent; the PSERS money was not being spent but it was being put on the side until the budget impasse was resolved.

Board member Louis Mafrice added that the board could reconsider its position when the second PSERS payment is due in December.

Kunselman disagreed with Oliverio’s argument, saying that the board had a good faith, legal argument for its actions.

“This is a temporary step to send a loud and clear message,” said Kunselman. “If the state doesn’t get its act together, they need to pay the political price.”

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