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Budget battle lines drawn in Harrisburg

| Monday, Jan. 28, 2013, 9:42 p.m.

HARRISBURG – Unless the Legislature comes up with changes to save $511 million in increased pension costs, the money will have to come out of other parts of Pennsylvania's budget, and education is a likely target, state Budget Secretary Charles Zogby said on Monday.

Zogby told the Pennsylvania Press Club that linking pension changes and education spending “isn't the only way to get things done, but it is one way.”

“The notion that we can bypass reform and still meet all the needs people expect state government to meet is a fallacy,” Zogby, a member of Gov. Tom Corbett's Cabinet, said in relation to the governor's budget address on Feb. 5.

Zogby said 70 percent of the pension fund obligation is for school employees' pensions. Talking to reporters after his remarks, he acknowledged that school funding is therefore a logical place to start.

The state's total pension liability is $41 billion. Pensions under the State Employees Retirement System and the Pennsylvania School Employees Retirement System cost taxpayers $1.5 billion this year and will increase to $5.16 billion in 2019-20.

Corbett will ask lawmakers to reduce benefits for new state employees and to look at potential reductions in benefits for current state workers.

“The governor has said very clearly we're not going to take benefits away from retirees,” Zogby said.

Any changes would apply to both the state workers' system and the teachers' pensions, said Zogby's spokesman Jay Pagni.

Opponents, including teachers' unions, reacted strongly to the possibility of pension cuts.

“It looks like the governor is ready to hold Pennsylvania's students and taxpayers hostage if he doesn't get his way on other issues,” said Mike Crossey, president of the Pennsylvania State Education Association.

“The governor is telling legislators to accept major changes to the pension systems or cut programs that are vital to their constituents,” said Ted Kirch, president of the American Federation of Teachers. He accused Corbett of using students and teachers as pawns to advance his agenda.

Don Thomson of North Huntingdon, who heads the Westmoreland County Conservative coalition called Corbett's proposal a “novel approach.

“I can see his point to try and cut education funding,” Thomson said. “I think that's one way. I am very much in favor of getting rid of the Liquor Control Board and some of that money could offset this pension problem.”

Corbett next week is slated to outline a state store divestiture plan.

“It's a false choice here,” said House Minority Leader Frank Dermody, D-Oakmont, said of Zogby's premise. “It's incredible he (Zogby) would even say something like that.”

The state needs to end corporate tax giveaways and look carefully at whatever surplus the new budget contains, Dermody said. It will also take more time for pension changes enacted in 2010 to take hold, Dermody said.

“We can do this without punishing education,” he said.

Senate Republicans, in general terms, expressed support.

“We clearly understand the need for serious pension reforms, as evidenced by the introduction of Senate Bill 2,” said Erik Arneson, spokesman for the Senate GOP Caucus. He was referring to legislation that would shift new hires from guaranteed pensions to a defined contribution plan.

“We look forward to seeing the governor's plan – which we have not yet seen – and working with him on pension reform, education funding, and the entire state budget,” Arneson said.

Brad Bumsted is the state Capitol reporter for Trib Total Media. He can be reached at 717-787-1405 or bbumsted@tribweb.com.

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