Philadelphia could be left behind in the dust with pension reform

Philadelphia could be left behind in the dust when it comes to pension reform.

Legislators in Harrisburg are considering two bills that would require municipalities to enroll new employees in a new type of pension plan, similar to a 401(K). Both bills, as currently written, exclude Philadelphia, which has a $5.7 billion pension fund deficit.

The sponsors of the bill -- state Reps. Keith J. Greiner (R-Lancaster) and Seth Grove (R-York) on the House side and by state Sen. John H. Eichelberger Jr. (R-Blair) on the Senate side – say the two bills would address rising pension costs and deficits across the state. The pension liability among all the municipalities is tallied at nearly $8 billion, of which $5.7 billion is just from Philadelphia.

So, why not include the municipality with the most severely underfunded pension plan in the state?

"If we added Philly into the mix, it would be a very heavy lift," Greiner said Wednesday, adding that Philadelphia's pension system is very complex.

Philadelphia "wasn't purposefully left out," said Lee Derr, executive director of the Senate Local Government Committee and Eichelberger's chief of staff. "It was never brought up as an issue."

The bills were drafted following lobbying and discussions with the Pennsylvania League of Municipalities, the Coalition of Sustainable Communities and some business chambers, Derr said. He added that the groups didn't focus on Philadelphia but the other municipalities across the state that are also facing pension issues (just over $2 billion combined, compared to Philadelphia's $5.7 billion hole.)

League of Municipalities executive director Rick Schuettler said because Philadelphia is a first class city, a state governing designation applied to cities with over 1 million residents (Philadelphia is the only one in the state), it has a different pension structure than the rest of the state.

"It would be a huge task to try to include Philadelphia," in the pension reform bills, Schuettler said. "You could do it separately."

Greiner said that he would be willing to amend his bill to include Philadelphia if he knew there was support for it. But so far, he hasn't heard from Mayor Nutter or any of the Philadelphia delegation.

The Lancaster Republican said that in passing conversations, he got a sense that some Philadelphia representatives would be in favor of including the City of Brotherly Love in his bill.

When I asked which ones, there was a pause. "I think they might have stepped down already," he said. Oh, them.

But Greiner wants Philly politicians to know that he's willing to include Philadelphia in the bill if they reach out. After all, there are some pension experts who say one of the smartest things Philadelphia could do is move from a traditional pension plan for new employees to a defined contribution plan, like a 401(k).

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