Pension reform

A top Republican in the state Senate said Monday that he's prepared for a late budget.

The commonwealth's spending plan is due June 30, and in recent years the GOP caucuses followed the lead of former Gov. Tom Corbett and his priority to meet that deadline.

This year, Senate Republicans have insisted their top priority is passing a public pension overhaul that reaps short-term and long-term savings for the state's deeply indebted retirement systems.

Senate Majority Leader Jake Corman said if pension talks stretch into the fall, so will the budget process.

Irina Zhorov / 90.5 WESA

Municipal pension funds in Pennsylvania are underfunded by a combined $7.7 billion, and many local lawmakers are pointing to state-level reforms as the solution. 

The State House of Representatives’ Urban Affairs Committee met with local leadership in Pittsburgh Monday to learn about what exactly municipalities want to see happen in the state Legislature.  

Pittsburgh Mayor Bill Peduto compared the municipal pension problem to a sinking boat.

Despite putting revenue from parking and the Rivers Casino into the pension fund, Pittsburgh’s pension problems aren’t getting any better.

That’s according to a recent audit that showed as of January 2013, Pittsburgh’s pension fund had assets of $675 million, but the liabilities stood at $1.16 billion – meaning the city only has about 58 percent of what it needs in the pension fund in order to ensure current and future payments compared to 62 percent in 2011.

AP Photo/Rodney Johnson,WTAE-TV, Pool

Republican Gov. Tom Corbett and Democratic challenger Tom Wolf met for their third and final debate in Wilkinsburg Wednesday evening.

The tone was less combative than previous debates, which Wolf attributed to the format of the debate, in which each candidate had one minute to respond to questions from an in-studio panel and the public via social media.

The main topics of the evening were education funding and the state’s pension debt shortfall.

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The he said, she said debate over state education funding and the controversy surrounding former Pennsylvania Education Secretary Ron Tomalis made its way to Pittsburgh Wednesday morning.

Former gubernatorial hopeful Katie McGinty spoke in the Allegheny County Courthouse gallery, criticizing Gov. Tom Corbett and stumping for Democratic nominee Tom Wolf.

McGinty is chairwoman of the Campaign for a Fresh Start, a new organization working in tandem with Wolf’s campaign for governor and the campaigns of Democratic legislative nominees statewide.

Gov. Tom Corbett is entering the fourth week of a town-hopping expedition discussing his plan to overhaul the state’s public pensions.

At a July visit to a coffee shop near Hershey Park in Dauphin County, Corbett repeated his refrain that the state’s pension debacle is a bipartisan issue.

“I do not view this as a Republican-Democrat issue,” he said. “Taxpayers, homeowners, property-owners — we don’t look at the R and the D.”

But the events on the governor’s barnstorming route haven’t been bipartisan.

Another proposal to overhaul the state's public pensions is officially in the mix.

The measure, unveiled last fall, received a thorough vetting from the Public Employee Retirement Commission (PERC) last Wednesday, a necessary step before it receives any kind of vote from state lawmakers.

The analysis found the plan could save the commonwealth about $30 billion over 30 years.

Gov. Tom Corbett is not giving up the ghost of a public pension overhaul proposal — saying he may still call a special session of the state Legislature to address the issue.

The measure still does not have enough support in the House and Senate, Corbett said at a roundtable discussion in Hummelstown Friday.

The governor has been making daily statements about the plan, which would reduce retirement benefits of future public workers.

Supporters say the changes would reign in long-term costs of public pensions.

Liz Reid / 90.5 WESA

Less than a week after Pennsylvania Gov. Tom Corbett ended the budget standoff with the state Legislature, he’s setting a new deadline for pension reform: election season.

Corbett was in Shaler Township Monday afternoon pushing an overhaul of the public pension system, which he said is necessary to help struggling school districts and stem the wave of rising property taxes.

A Hybrid Approach to Pennsylvania Pension Reform

Jun 19, 2014
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Pennsylvania Governor Tom Corbett recently aligned with State Representative Mike Tobash and other legislators who have developed a new way to administer public employee pensions in an effort to save taxpayer money.

However, a report from left-leaning Keystone Research Center economist and executive director Stephen Herzenberg says,

"The proposed plan would make little progress reducing the state’s pension debt, while forcing Draconian benefit cuts on future teachers, cafeteria workers, nurses, and state employees."

The Corbett-Tobash proposal would replace Pennsylvania’s largest pension plan with this new hybrid system for all new state and school employees entering the workforce.

Herzenberg and Rep. Tobash both discussed the new approach and how best to tackle the state pension crisis.

The Pennsylvania House Majority Leader isn’t ruling out a move to trim the state’s scheduled payments toward its pension debt.

“There’s not an appetite to reduce the collars (scheduled payments) in the House,” said Representative Mike Turzai (R-Allegheny), as he stressed the need for an overhaul to pension benefits for future employees.

Pension Plan Reform proposed by Rep. Seth Grove (R-York) could save municipalities from the $6 billion in debt, according to supporters.

The reform would only be for police and fire fighters that are newly hired.  

“We’re trying to be proactive. We’re trying to save and protect those pensions for current employees and current retirees by trying to restructure our pension system, make it sustainable from now and until the future,” said Grove.

State Auditor General Eugene Depasquale joined Pittsburgh Mayor Bill Peduto Wednesday to announce recommended reforms addressing the $6.7 billion of underfunded municipal pension liabilities in Pennsylvania.

According to Depasquale, 47 percent of municipalities in Pennsylvania are considered distressed when it comes to their ability to fund employee pensions. As a solution to this statewide concern, Depasquale issued 13 recommendations for state legislators to enact.

The state Senate president pro tem is beginning his eighth year with a call to action for some kind of public pension system overhaul.   

Sen. Joe Scarnati, a Republican of Jefferson County, has been re-elected unanimously to his position.  

In his first address to the Senate this year, he said the budget outlook demands lawmakers grapple with rising public pension costs.

"The choices we need to make will be many but the largest cost and growth in next year’s budget will be pension cost and we need to make choices," Scarnati said.

Pittsburgh City Controller Michael Lamb said Thursday’s board vote to lower the pension fund’s projected rate of return was good financially for the city.

The fund’s assumed rate of return was lowered from 8 percent to 7.5 percent after a 5-2 vote led by Mayor Luke Ravenstahl's allies. Supporters of Mayor-elect Bill Peduto then accused Ravenstahl of political maneuvering.

Ravenstahl was opposed to lowering the rate during most of his tenure.

A state House Republican is presenting a plan to deal with the state’s growing public pension debt.

The proposal by Cumberland County Representative Glen Grell differs significantly from ones offered by the Corbett administration and Republicans in the Legislature by making potential benefit reductions optional for current employees.
    
It relies heavily on borrowing to bring down pension payments scheduled to eat away at state and school district budgets, a move viewed with skepticism by the Corbett administration.  

State government reform activists are pointing to their annual update on the costs of Legislature-approved increases to their benefits as an illustration of why pension reform efforts are doomed.

Eric Epstein, founder of the group Rock the Capital, said the late-night pay raise lawmakers approved for themselves in 2005 has inspired the most ire among voters, but it's not the most costly thing lawmakers have done to boost their own benefits in the past 20 years.

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Gov. Tom Corbett has signed an on-time budget, but without any victories on his other top three legislative priorities.

Liquor privatization, transportation funding and pension overhaul will have to wait until the fall for further legislative action.

A transportation funding plan got stuck in the House. A bid to change how alcohol is sold in Pennsylvania stalled in the Senate. Pension overhaul is a plan neither chamber is ready to advance.

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The state budget deadline is days away, but the spending plan is practically an afterthought to lawmakers as Gov. Tom Corbett's other priorities remain unresolved.

A scaled-back pension overhaul proposal is advancing in the Senate and still needs House approval. But it's not the subject of intense disagreement between the chambers, as Senate GOP spokesman Erik Arneson notes is true of other items on the governor's to-do list, like transportation funding and liquor privatization.

A state Senate committee has approved a scaled-down version of the governor's pension overhaul plan to address the commonwealth's pension debt.

The bill was re-written to include just one of the three prongs of Gov. Tom Corbett's proposal — one that has been said to be far more palatable to legislators. The measure would enroll most future state and school employees into a 401(k)-style plan, instead of the traditional defined-benefit plan that locks in payouts according to a formula known in advance.

An estimated 350 state and public sector workers rallied at the state Capitol Monday to call for more funding for education and human services.

Members of the Service Employees International Union also urged Gov. Tom Corbett to drop his calls for pension overhaul, which would include reducing the future benefits of current state and public school employees.

State Senate lawmakers are beginning the public vetting of a three-part proposal from the governor's office to deal with the state's multi-billion dollar pension debt.

Months of debate leading up to the hearing have only made the groups on either side of the issue seem as entrenched as ever.

Gerry Oleksiak, vice president of the Pennsylvania State Education Association, reiterated the unions' position that the governor's plan to reduce the future benefits of current employees is an unconstitutional breach of contract.

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Gov. Tom Corbett and his allies in the state Legislature have introduced controversial legislation to reform the pension systems for state employees and public school teachers.

The sponsors say the bills make necessary cuts to reduce the state’s massive liability problem. Unions argue that the measures are illegal because they cut current workers’ future benefits.

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Gov. Tom Corbett and his allies in the state Legislature have introduced controversial legislation to reform the pension systems for state employees and public school teachers.

The sponsors say the bills make necessary cuts to reduce the state’s massive liability problem. Unions argue that the measures are illegal because they cut current workers’ future benefits.

To get a handle on how Pennsylvania’s two public pensions ended up in their current funding crisis, one has to look more than a decade into the past.

A Big Commitment

Gov. Tom Corbett is reluctant to pull any legislative issue from the very top of his crowded agenda.

But other legislative leaders appear more than happy to do it for him.

The governor has said he wants four things done before lawmakers leave for their summer recess: a budget, liquor privatization, a transportation funding package and an approved overhaul of the state’s two pension plans and the debt that comes with them.  

One state lawmaker is raising the controversial idea of borrowing money to help put a dent in the state's $47 billion unfunded pension liability.

Rep. Glen Grell (R-Cumberland), who's been working on pension overhaul proposals, has suggested one way to pay down some of the state's pension debt would be to issue a pension obligation bond - not as a way to cover required state contributions to the two pension plans, but as a way to borrow money at a better rate and produce some savings.

The heads of the state’s two public pension systems are working to represent their members while delivering straight-talk about the size of the state’s pension debt to lawmakers.  

The commonwealth and school districts now face spiking payments to the funds, scheduled as part of reforms known as Act 120.

The Coalition for Sustainable Communities (CSC) is calling on state lawmakers to include municipal pension reforms in upcoming deliberations.

“We have literally dozens and dozens of municipalities with very severe pension problems across Pennsylvania. These are pension problems that, without changes to pension laws, municipalities will never be able to pay off,” said Brian Jensen, executive director of the Pennsylvania Economy League of Greater Pittsburgh, and member of the CSC.