State Pensions

Gene J. Puskar / AP Photo

Pennsylvania Gov. Tom Wolf isn't ruling out a switch to 401(k)-style retirement plans for future state and school employees.

"I think we can actually come up with a pension plan that's fair to employees and that meets the concerns that have been expressed by taxpayers," said Wolf when asked if he could sign such a proposal.

AP Photo/Matt Rourke

A month after Republican lawmakers advanced a plan to end the traditional pension for new state workers, they’ve set their sights on doing the same for future municipal employees in Pennsylvania.

The cited reason for the change has been repeated in most debates over public pensions: People are living longer, and the annual pension payouts for city retirees are getting harder for municipal governments to afford.

State Pension Crisis: Where Do We Go From Here?

May 21, 2015
Emma Lee / WHYY

There may not be three more yawn-inducing words in the English language than: "public employee pensions."

But considering the $53 billion dollars worth of state employee pension debt currently saddling the Commonwealth of Pennsylvania, those words are at the center of nearly every conversation in Harrisburg this spring.

State Pension Crisis: How Did We Get Here?

May 19, 2015
AP Photo/Chris Knight

Pick your favorite issue or cause in Pennsylvania: public education, services for the poor, tax breaks for businesses.

Chances are, there's going to be less money for any of these moving forward because the state's public employee pension bill is growing exponentially, with a current unfunded liability of $53 billion.

Are Young Municipal Workers Bearing The Brunt Of Pension Reform?

May 5, 2015
Kate Lao Shaffner / WPSU

Many Pennsylvania municipalities are already taking steps towards reforming their pension plans. Because municipalities cannot legally break pension obligations already promised, reform usually means changing the pension plans for new employees while older employees' pensions remain intact. So what does that mean? Is the younger generation bearing the brunt of pension reform?

State Rep. Peter Daley (D-Washington) believes he has part of the solution for the $41 billion unfunded state pension crisis in Pennsylvania.

Daley says that if the retirement age for teachers and state workers was lowered it would save the state money by phasing out higher paid teachers, and bring in new lower paid teachers with a 25 percent reduction in pensions.  

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.

http://www.senatorschwank.com/

Pennsylvania’s multi-billion dollar public and municipal pension issues have long been cited by lawmakers as an obstacle to economic growth. To address pensions, Senator Judy Schwank (D-Berks) has introduced a bill that would create the Public Pensions Review Commission.

“To examine the current systems, and to recommend statutory or regulatory changes needed to achieve and maintain a sound, stable public pension structure for both the state and for local governments,” said Schwank.

The 25-member group would be authorized to conduct hearings and receive appropriate information and analysis. Some of the questions to be addressed, said Schwank, are what does Pennsylvania’s future workforce like? How can the state attract and retain talent, and how can the state achieve retirement security?

It seems that every few months Pennsylvania’s famously underfunded public pension systems receive some new low ranking or grade. The latest reproach takes issue with the way pension payouts are determined – based on age and years worked.

A report by the nonpartisan Urban Institute calls the rules setting state retirement benefits arbitrary. It restricted its analysis to employees hired in 2013 who will receive pension benefits through the State Employee Retirement System, or SERS:

The state owes about $50 billion to its two public pension funds, which pay out retirement benefits to state and public school employees.
               
But the debt would be larger if one little figure were adjusted: the rate of return.

It’s what the pension funds assume they’ll make on investments. The higher it is, the less the commonwealth must pay up front for retirement benefits.

The current rate is seven-and-a-half percent, and some economists say it would be more realistic if it were lowered.

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.

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.

Democratic and Republican state lawmakers differ as to whether it matters that a plan to change pension benefits doesn't take a big bite out of the massive debt the state has already accrued.

The Republican plan to change pension benefits for future state and school employees would bring savings — just not the kind that would help the state pay off pension debt much faster than existing law requires.

House lawmakers have the actuarial analysis they need to start collecting votes on a measure to overhaul the state’s pension plans.

A state commission central to the debate over changing public pension benefits in Pennsylvania says its consulting actuary finds that the amended House proposal would save more than $11 billion for the commonwealth over a 30-year span.

Pennsylvania Auditor General Eugene DePasquale said at a news conference Monday that he’ll soon begin an audit of the state’s Department of Community and Economic Development.

DePasquale said he’s looking for subsidies and tax breaks for corporations that don’t positively impact middle class job growth. He said the state should eliminate such subsidies and tax credits before touching “one dime” of public employee pension funds.

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.

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.

The Pennsylvania Pension Crisis: How Did We Get Here?

May 16, 2013
90.5 WESA

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.

90.5 WESA

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

State House and Senate lawmakers have stepped up to sponsor legislation to advance the governor’s plan to overhaul the state’s two pension systems.

The Corbett administration says proposed changes to state pensions will ultimately withstand a court challenge because they can be proven to serve the public good.

One piece of the governor’s plan would reduce future unearned benefits of current state and school district employees.

Public sector unions have promised a court battle if the change is signed into law, saying it would be struck down for breaching the state’s contract with workers.