The Pennsylvania School Boards Association yesterday proposed giving future school employees a different set of retirement benefits - which critics call inferior - to shore up a state pension fund.

PSBA acknowledged its proposal wouldn't diminish the rate spike that the state and school districts face in coming years to meet obligations to retirees. Employer contributions are projected to jump from 4.78 percent of payroll this school year to 33.6 percent in 2014-15.

However, PSBA said modifying retirement benefits for employees hired after June 30 would help ensure the long-term stability of the Public School Employees Retirement System of Pennsylvania.

PSBA Executive Director Thomas Gentzel called for creating a "new class of employees" who would get a "hybrid" of the traditional defined benefit plan and the equivalent of a 401(k) plan. Currently, the state and school districts offer only a defined benefit plan.

The defined benefit portion of the hybrid model would include an employee contribution of 3.25 percent of salary, a multiplier of 1 percent and a 10-year vesting period. The 401(k)-style component would include a minimum 3 percent employee contribution and a 2 percent employer contribution.

In addition to employer contributions, shared by the state and school districts, the retirement system now is funded by investments and member contributions.

Members will contribute about 7.34 percent of their salaries, or about $992 million, this school year. The current vesting period is five years. The maximum multiplier - used along with years of service and salary amounts to calculate benefit amounts - now is 2.5 percent.

Mr. Gentzel said the hybrid system would be less costly for the state and districts and help to eliminate yearly fluctuations in employer contributions.

Pennsylvania State Education Association, a teachers union, rejected the proposal, saying similar plans failed in other states.

"Basically it takes a secure retirement promise and erases it for new employees," spokesman Wythe Keever said. He predicted it also would hinder school districts' ability to "attract and retain well-educated and highly qualified teachers and support staff."

PSBA said state Rep. Glen Grell, R-Cumberland County, and Sen. Gene Yaw, R-Lycoming County, agreed to sponsor legislation based on its proposal.

The state and school districts will pay about $616.6 million into the retirement system this school year, but that could balloon to more than $5 billion in 2014-15 because of unfunded liabilities.

Investment losses and inadequate employer contributions have been blamed for the shortfall. The system was 79.2 percent funded June 30, leaving an unfunded liability of $15.7 billion.

PSBA's proposal would include safeguards to ensure that the state and school districts don't under-fund the system in the future. It also would require the state, which pays about 55 percent of employer costs now, to pick up a larger share if school districts' tax rates reached a certain threshold.

Mr. Keever rejected the idea of shifting more funding responsibility to the state, saying it's a way to worsen annual Harrisburg's annual budget battles.

Mr. Gentzel said the proposal isn't perfect, and he invited other groups to put their ideas on the table.

"We're trying to kick-start the discussion and get the Legislature to deal with this," he said.

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