HARRISBURG — Disparate benefits abound in Pennsylvania’s pension system for public school workers, records show.
Annual pensions range from a low of 12 cents to a high of $228,168 — the latter paid to former Abington School District Superintendent Amy Sichel, who retired in 2018 after 42 years of service.
The pension system’s formula is based on years of service and the salary of the employee before retirement so highly-paid superintendents with decades of service would see far larger pensions than most retirees.
The Pennsylvania Public School Employees Retirement System, or PSERS, carries a $45.5 billion unfunded liability. The issue trickles down to the state’s 500 school districts, where elected officials routinely raise property taxes to cover growing retirement costs.
The system manages benefits for roughly 500,000 active and retired school workers, but has been plagued by controversy — including scrutiny over questionable investments; admitted miscalculations that raised contribution rates for 100,000 teachers; and a federal investigation into decisions the board made.
Now, many PSERS beneficiaries say the legislature should approve a cost of living adjustment — the first in more than 20 years — as inflation, rising medical costs and volatile economic forces jeopardize the “dignified” retirement many say they were promised.
Through a public records request, The Center Square identified 918 PSERS retirees collecting $100,000 or more each year. The state pays out $515 million a month to more than 222,000 beneficiaries, with many receiving an average annual pension of $26,520.
But payout choices can impact total benefits, records show. Anthony Costello, former superintendent in the Owen J. Roberts school district in Chester County, had the second-highest annual pension at $222,684. He had 39 years of service when he retired in 2010.
Costello chose a reduced pension so that upon his death, half will transfer to a surviving beneficiary. Sichel and Costello also chose to withdraw all their contributions — plus interest — in exchange for smaller pension payments.
The decision isn’t an uncommon one, either. Data shows another retiree accepted a 22% reduction — from $24,000 to $18,684 annually — and, in return, received a payout totaling nearly $93,000 for all contributions paid into the plan, with interest.
In June 2022, the Independent Fiscal Office analyzed the overall price tag of a cost of living adjustment for PSERS — as proposed in a bill from last session — and determined doing so would increase benefit payments $432.8 million over a 10-year period, impacting nearly 47,000 retirees.
The costs — combined with the system’s financial instability — makes critics wary of supporting a COLA without underlying reforms to fix the unfunded liability and prevent it from reoccurring.
