If you edit a Z39.50 server with the character set to MARC-8, the selected attribute is not set for MARC-8, and the character set dropdown defaults to the first item in the list, UTF-8.
The problem appears to be the hyphen, which is not permitted in variable names. The offending code is: $template->param( $_ . $data->{$_} => 1) for ( qw( syntax encoding ) );
I'll fix this as part of bug 9497. *** This bug has been marked as a duplicate of bug 9497 ***