Monday, April 21, 2014
Inquirer Daily News

In PA, an appetite for pension reform - but menu options vary

The Pennsylvania General Assembly is on the clock.

Gov. Tom Corbett has challenged state lawmakers to get a pension reform package to his desk by the end of the spring. It’s a tall order, considering a massive unfunded liability of $47 million, the differing opinions about what the state should do and the complications of an election year.

“I think members recognize the need to do something. The problem is defining what that something is,” said state Rep. Glen Grell, R-Cumberland.

Talk about pension reform took center stage again Tuesday as lawmakers continued their appropriations hearings, with officials from the State Employees’ Retirement System and the Public School Employees’ Retirement System providing testimony.

There have been plenty of suggestions to reform a pension system that’s been underfunded for a decade. State Rep. William Adolph, chairman of the House Appropriations Committee, said there’s an appetite to finish the task, as long as any increases in debt are balanced by long-term reform.

“How far we’ll go with that, it all depends on how many votes we can get for it,” said Adolph, R-Delaware.

Corbett’s proposed 2014-15 budget, which ups spending in an election year, already includes the deferral of $300 million in pension payments to buy some short-term financial relief. The governor wants to pair that with long-term reform to take the risk off of taxpayers.

“The cost of doing nothing is significant, and that cost is to the taxpayers of Pennsylvania,” said Jay Pagni, Corbett’s press secretary.

The General Assembly balked last year at Corbett’s proposal to shift current workers and future hires to a 401(k)-style system, and most indications point to only new employees being affected should pension reform succeed this year.

State Rep. Joe Markosek, D-Allegheny, serves as minority chairman of the House Appropriations Committee and said anything affecting current retirees is “definitely” off the table and he believes changes for current employees would be found unconstitutional.

“Some of these plans just compound the problem rather than help,” Markosek said.

Grell already has his own plan that would include using bonds to pay off pension debt. Some officials are squeamish, though, when it comes to piling on debt, while the administration seems more amenable to a hybrid plan put forth by state Rep. Mike Tobash, R-Schuylkill.

For now, Markosek believes pension reforms made in 2010 will eventually pay off, “albeit perhaps with a little more anguish than what some folks would like.”

The same law, though, has led the state to face sharp annual pension costs increases, while also allowing the Legislature to artificially lower the state’s annual pension contributions.

For now, almost two-thirds of every new dollar of revenue is swallowed by pension obligations, highlighting the challenge facing Pennsylvania’s elected officials.

“We have a lot of work to do, don’t we?” asked state Rep. Mark Mustio, R-Allegheny, during the budget hearing.

Andrew Staub is a reporter for PA Independent and can be reached at Andrew@PAIndependent.com. Follow @PAIndependent on Twitter for more.

The Pennsylvania Independent is a public interest journalism project dedicated to promoting open, transparent, and accountable state government by reporting on the activities of agencies, bureaucracies, and politicians in the Commonwealth of Pennsylvania. It is funded by the Franklin Center for Government and Public Integrity, a libertarian nonprofit organization.

Andrew Staub PA INDEPENDENT
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