PSS ended fiscal year 2008 last week with a $7.8 million unfunded debt to the Retirement Fund as a result of the lowered contribution rate set by Public Law 16-2.
The law took effect in Oct. 2007, but PSS began paying 11 percent starting only in pay period 15.
PSS has 24 pay periods.
The school system’s unfunded liability is the difference between the actuarial rate of 36.77 percent it previously paid to the Fund and 11 percent.
An earlier law, P.L. 14-98, mandated PSS to pay a 24 percent contribution rate to the Retirement Fund.
PSS now owes the Fund the accrued liability plus the interest incurred for the system’s local and federally funded employees.
PSS has over a thousand employees including nearly 300 funded by federal programs.
For its local hires, PSS incurred a $4.6 million accrued liability and $1.2 million interest. For federally funded personnel, PSS recorded a $1.8 million total accrued liability plus interest.
Due to the big shortfall projected by the Retirement Fund, its trustees stopped processing the retirement papers of employees whose employer’s contribution is delinquent.
During last week’s special meeting of the Board of Education, members decided to ask the Legislature to waive the 25 percent penalty imposed on PSS and restore its 24 percent contribution.
BOE Vice Chairman Herman T. Guerrero said the way rates have been imposed on PSS, “it seems they’re trying to make money from us.”
PSS said it has been regularly paying its contributions to the Fund which amount to $130,000 for every two weeks, covering its local and federal employees.
PSS was appropriated $35.8 million for fiscal year 2008.
The projected Fund shortfall was added to its budget request for FY 2009 which amounts to $64 million.
However, under the pending House budget bill, PSS will receive only $38.2 million.
