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Letter to the Editor
Sunday, Feb. 9, 2014, 9:00 p.m.

Gov. Tom Corbett, in his state budget pension proposal, wants to substantially reduce the state's pension contributions below those required by current law. This reduction, achieved by lowering the state's pension ‘collars' (i.e., the maximum annual increase in pension contributions), would be 2.25% of salaries in 2014-15, 4% of salaries in 2015-16, and as much 5% to 6% in 2016-17 and 2017-18.

Corbett's own November 2012 pension report and pension experts across the board have recognized the state's failure to make required annual contributions to pensions as the main reason that Pennsylvania has a large pension debt today. In fact, Pennsylvania ranks 48th out of 50 states measured by the share of required annual contributions it has made since 2003.

Reducing contributions to pensions is not an effective recipe for addressing Pennsylvania's pension debt.

I also worry the governor wants to spend the savings from an unspecified legislative change to state pensions. He made a similar proposal in his 2013 budget address. But three actuaries reported the Corbett proposal to shift new employees into 401(k)-type defined contribution pension plans would not decrease the state's pension debt, but increase it by $40 billion.

Making the pension contributions required under law should be the starting point for lawmakers considering the ‘14-15 budget. Anything less is, to borrow the Governor's phrase, ‘kicking the can down the road.'”

Stephen Herzenberg

The writer is an economist and executive director of the Keystone Research Center in Harrisburg.

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