Bill takes stab at Pennsylvania pension crisis
With two years left until a wave of payments come due for Pennsylvania's state and school employee pension funds, the House Appropriations Committee released a bill that would cap taxpayer payments for the next several years and defer higher costs.
Lawmakers concede House Bill 2497, sponsored by Appropriations Committee Chairman Dwight Evans, D-Philadelphia, is a starting point for debate that will likely grow more heated.
"There's always been a desire to get the public debate started. ... Even if it is not resolved this year, we can get a lot of legwork done," said Evans' aide, Johnna Pro.
Many states, reeling from investment losses their public pension funds took in 2008 and early 2009, have acted. According to the National Conference of State Legislatures, 15 states made adjustments to their pension plans this year.
Pennsylvania's public pension funds took major losses when the markets tumbled. Those losses were compounded by a complex string of events dating to 2001 when lawmakers boosted benefits, reduced employee vesting periods by half, added a cost-of-living adjustment for retirees and passed legislation to defer the cost of those moves by a decade.
The bill comes due in 2013-14. Pension fund estimates show the tax-funded employer contributions to the two pension funds ballooning from $776 million this year to $3.15 billion in two years.
School districts, which must come up with half the employee contribution for the school pension fund -- the state absorbs the other half -- are keenly aware of projections that show property taxes would have to increase by an average of more than $500 per homeowner to meet the spike in obligations.
"We have 170 school districts that have passed resolutions for relief on the pension issues," said Tim Allwein of the Pennsylvania School Boards Association.
Allwein said the school boards want the General Assembly to do something more than defer costs. The association released its own proposal last year seeking major changes to the structure of the pension system for new hires.
"You control costs long-term by changing the benefit levels -- changing the multiplier, the vesting, the rules on withdrawals," Allwein said.
Wythe Keever of the Pennsylvania State Education Association said the teachers union could support Evans' bill as long as it is not amended.
The teachers say pension problems stem from the state's failure to make adequate contributions to the plans. They are adamant that any two-tiered pension system -- one for those on the payroll now and one for new hires -- would hamper the state's ability to attract the best teachers.
Senate Republicans, however, say structural changes may be necessary.
"We are interested in an honest conversation about how to reduce the future cost of the state pension systems. That conversation may include such issues as the vesting period, the multiplier and others," said Erik Arneson, a spokesman for Senate Majority Leader Dominic Pileggi.
Gov. Ed Rendell, who first called for action on the pension funds two years ago, supports the Evans bill. Rendell's press secretary said inaction on the issue has contributed to the magnitude of the problem facing the state.
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.
- Pennsylvania investigators get truck to aid in finding child predators
- Conservative legislator puts credentials on line in bipartisan medicinal marijuana effort
- Racino near Youngstown to carve out slice of Pennsylvania market
- State workers paying less than most for health benefits
- Food fundraisers have to be healthy — it’s the law
- Demand for truck drivers soars in Western Pennsylvania
- Unusually cold winter, spring reduces population of Western Pa. stink bugs
- Newlyweds guilty in Craigslist killing