Pa. pension bill could worsen crisis, lawmaker warns
- Author: Zachary Reyes Jun 10, 2017,
Jun 10, 2017, 9:29
"This plan is step one in implementing meaningful pension reform", said Saccone. Workers could elect to have all their retirement benefits placed into a 401 (k). It is not an exaggeration to say that, at the state level, the pension problem is the most important public policy priority in a generation. He released a statement that reads in part, "Senate Bill 1 would have no adverse impact on retirees or current state or public education employees".
During floor debate, Rep. John McGinnis, a Republican from Blair County, urged his colleagues to directly attack the pension debt, characterizing the bill's changes as "synonymous with a phenomenon called kicking the can down the road".
But supporters say it'll help prevent taxpayers from bearing the full burden of downturns in the stock market that have triggered higher payments by state government and school districts.
The new hybrid arrangement will cut management fees by a combined $3 billion, as well as lowering the taxpayer's pension risk by about two-thirds, according to a report from the state's Independent Fiscal Office. "What is the risk?"
While Pennsylvanians make lottery purchases in person from a machine that spits out tickets, Reschenthaler said the wave of the future is iLottery, an interactive gaming program that would operate online. The pension debt is attributed to the retirement benefits of current employees and retirees.
Various employees are excluded from mandatory enrollment in the new plans in the State Employee Retirement and School Employment Retirement systems. The new plans would start to take effect for those hired in 2019, including judges or lawmakers who start their service after that date.
In less than seven years, the unfunded pension liability has more than doubled from less than $30 billion to $62 billion. That would seem to put lawmakers between a rock and a hard place: They can decide on some level of expanded gambling, which along with new revenue will bring with it an ever-heavier load of social baggage (addiction, broken lives and families, etc.); or they can do nothing and watch the state's financial structure continue to crumble.
The retirement age would rise from 65 to 67 and pension benefits would be tied to five years of salary, instead of three years, to smooth out spikes driven by overtime or other salary changes that can inflate pension benefits.
The bill would exclude state police, corrections officers and other law enforcement officers who do not receive Social Security benefits.
House Majority Whip Bryan Cutler, R-Lancaster, said in a statement that he knows it's not the flawless bill, but a "strong bill that receives a vote is far better than a ideal bill that may never exist".
"Ten years ago, many denied a pension crisis existed, and just two years ago, Gov. Wolf vetoed pension reform". "It's not about an immediate budget solution".
State Rep. Jeff Wheeland, R-Loyalsock Township, said he plans to vote in favor of the bill, despite its limitations. That scenario shows a potential net cost of $580 million to the unfunded liability if the pension systems fell short of their assumed rate of investment returns of 7.25 percent.
Upon presenting HB 271, House legislators said that the bill should be perceived as a build-on to the Senate proposal and that it aims to bring further revenue to the state's coffers. "The design of the plan had flaws, and it was, to some degree, like dumping water into a leaky bucket".