Lawmaker proposes pension approach
HARRISBURG — A key Republican lawmaker proposed borrowing $9 billion on Monday as part of an approach to rein in the soaring costs of pensions for nearly 380,000 Pennsylvania teachers and state employees.
Rep. Glen Grell advocates establishing a cash balance retirement plan for newly hired employees that would guarantee an annual return of at least 4 percent.
He would offer financial incentives to employees who agree to certain pension adjustments.
Grell, chairman of the House GOP majority task force on pensions, acknowledged that neither Republican Gov. Tom Corbett nor House leaders have embraced his proposals and said the legislation has yet to be introduced.
“There's much work remaining to be done on this issue,” he said, standing alone on a stage, sandwiched between charts and graphs.
Corbett made pension reform a top legislative priority this year, calling for decisive action to shrink a $41 billion unfunded liability between the state's two major public pension funds.
But his original proposal to reduce benefits of employees foundered amid opposition from unions that said it is unconstitutional. Committees in both houses have since endorsed alternative bills to require newly hired employees to enroll in a 401(k)-style plan, but the debate has been in limbo since lawmakers adjourned for a summer break.
Grell said the revenue and savings produced by his plan would offset most of the unfunded liability during 30 years.
The $9 billion in borrowing would address almost a decade of pension underfunding by previous legislatures and governors, and signal the state's resolve to meet its pension obligations, he said.
The state would cover debt service he estimated at $550 million a year.
Under the proposed cash balance pension plan, hires and taxpayers would share the risk of investing, contributing 7 percent of their pay while employers would chip in an additional 4 percent initially and 5 percent after 15 years of service. Investment returns of more than the guaranteed 4 percent would be split between employee and employer.
Spokesmen for the governor's budget office and the House Republican caucus declined to discuss specific objections to Grell's proposal.
But the Cumberland County lawmaker received a warmer reception from the Pennsylvania State Education Association, the state's largest teacher union, and the Pennsylvania School Boards Association.
“Rep. Grell's ideas represent an interesting new direction, finally moving the conversation away from costly legislation that would create a new 401(k)-type plan and cost taxpayers another $40 billion,” PSEA President Mike Crossey said.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Retired LCB official, expected to plead guilty to kickbacks, stands to lose $52K pension
- Judge OKs gender surgery for 48-year-old called mentally incompetent by parents
- Casey, Coons become 32nd, 33rd senators to back nuclear deal with Iran
- Bishop’s ex-assistant in Venango charged with Lutheran synod thefts
- Conneaut Lake Park wants to sell some land
- Potential suspension of Pennsylvania AG’s license unusual
- State’s high court rules in favor of turnpike worker, will get another chance to prove his firing violated whistlebower laws
- Grieving pet owners find loving support in Pennsylvania group
- Wall drawings of turn-of-the-century prizefighter found in Lancaster home
- Ex-LCB official Short to plead guilty to soliciting, concealing kickbacks from vendors