Senate - (and Local Senator) Approves Public Pension Reform Measure

Senator Don White (R-Armstrong/Indiana) approved a measure restructuring the state’s two public employee pension systems – the State Employees’ Retirement System and the Public School Employees’ Retirement System – in order to make them viable in the long term yesterday by way of Senate Bill 1.

“This proposal is the first major step in controlling the runaway costs of Pennsylvania’s public systems. These costs increase every year and the burden ultimately falls upon taxpayers,” Senator White said. “Pension obligation payments are the driving force behind the massive tax increases that Governor Wolf is proposing for next year’s state budget and they are driving up property taxes imposed by school districts. Reform of the current system is the only answer. This is a practical and workable proposal that shares the burden and the risks,.”

“In fact, Senate Bill 1 includes the provisions of Senate Bill 401, the bill I introduced that would convert all members of the Pennsylvania Legislature from a defined benefit pension plan to a defined contribution plan. We as legislators cannot in good faith ask public employees to move to a defined benefit program if we are not willing to do the same.

Senator White also wished to remind organizations opposing the reforms of the fact that money spent on pensions cannot be spent by school districts to hire employees or pay salaries and benefits.

“When it comes to the limited resources of our schools and state government, this truly is an ‘either or proposition’ and that fact must be recognized,” Senator White concluded.

Regionally, Senator Pat Stefano (R-32) also voted for passage while shielding taxpayers from further risk.

Senate Bill 1, which Stefano co-sponsored, would reduce long-term costs to taxpayers by creating a 401k-style pension system for newly hired employees who are eligible to participate in one of the state’s two public employee pension systems – the State Employees’ Retirement System and the Public School Employees’ Retirement System.

The bill would not affect benefits already earned by current employees or retirees. However, current employees would be given the option to either increase their contribution rate or accept a reduced benefit going forward. Retirees would not be affected by Senate Bill 1.

“State pension payments are scheduled to increase by $1 billion this year alone, placing a huge and unsustainable burden of state and local governments that will result in higher local property taxes, less money for worthwhile state programs and fewer education dollars available to help students in the classroom,” Stefano said. “Today we took an important step toward getting the taxpayers out of the risk business with pensions and protecting the security of employees, taxpayers and retiree.”

Stefano said that when he was elected to the State Senate, he chose not to join the pension system because he had such grave concerns about its sustainability. He said action on Senate Bill 1 will address those long-standing concerns.

A non-partisan analysis by the Public Employee Retirement Commission determined the measure would save $18.3 billion over the next 30 years. It provides seven times more savings for the Commonwealth and school districts than the Governor’s proposal, which would increase the Commonwealth’s debt by $3 billion.

The bill would require lawmakers to participate in the same pension system as newly hired employees. It also creates a new commission to study investment options and fees associated with managing pension system assets.

Senate Bill 1 was sent to the House of Representatives for consideration.

 

No Comments

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a comment

You must be logged in to post a comment.