Wolf, GOP leaders talk schools, pension reform

Gov. Wolf speaks outside Downingtown Middle School, where he talked about his budget impasses with Republican lawmakers.

HARRISBURG - Raising hopes for a budget deal, Republican legislative leaders emerged from negotiations Wednesday saying they would give Gov. Wolf a portion of the money he wants for public schools as long as he accepts their plan for pension reform.

Though details were scant, Republicans who control both legislative chambers said they would agree to allocate an additional $400 million for classroom spending on kindergarten through 12th grade if the governor agreed to their counterproposal for reining in the ballooning cost of public-employee pensions.

Neither side said how it would raise the additional $400 million, although Republicans made it clear they still want Wolf to agree to privatize the sale of wine and liquor to raise new revenue.

"If the governor accepts it, it's huge," Senate President Pro Tempore Joe Scarnati (R., Jefferson) said as he emerged from the talks, which lasted less than 30 minutes. "It's a home run for what the governor wants to deliver, and it's a home run for what the legislature has wanted to deliver on pensions. The significance of this can't be stated enough."

Wolf said only that he believed he was making progress with the legislature.

"We started these conversations with the idea that I would be willing to make some big concessions and compromises on pensions, which is important to them. I need them to move into my camp on education - and I think they've done a pretty good job there," the governor told reporters.

Wolf spokesman Jeff Sheridan called the Republican counterproposal on pension reform "significant" and said Wolf would review it over the next few days.

Sheridan said that aside from the $400 million for K-12 education, Wolf was also seeking hundreds of millions of dollars in additional funding for early-childhood and higher education, two areas that have yet to be addressed.

The budget impasse, now in its second month, means the state is unable to pay vendors or nonprofit organizations and local governments that rely on state aid.

Schools are also affected. Without a spending plan, the state will be unable to send districts a substantial infusion of cash due at the end of the month, as many prepare to open their doors for the new school year.

To raise more money for public schools, Wolf has proposed a new tax on extraction of natural gas from the Marcellus Shale.

Wolf initially proposed borrowing $3 billion to help pay down the state's pension debt and using proceeds from a plan to modernize the state's wine and liquor stores to help pay it off. Republicans have rejected that idea.

Instead, the GOP-dominated legislature has pushed for a plan that would place all new state and public school employees into a 401(k)-style plan. It would not apply to current employees, whose pensions are calculated using a formula that relies on their years of service and highest three years of pay.

The GOP's counterproposal still calls for shifting new employees into a defined-contribution plan, but would, among other changes, increase the employer contribution rate for public school teachers.

Sen. Vincent Hughes (D., Phila.), the ranking Democrat on the Appropriations Committee, said the plan has to be carefully vetted. "We can't just accept this on face value," he said.

Senate Majority Leader Jake Corman (R., Centre) called it a "one-time offer."

He added: "If he takes it, I think it moves us in the direction that we can put this thing to bed fairly quickly. If he rejects it, then we are back to square one."