Pennsylvania pension reform | Pension360

Corbett Says He’d Form Pension Commission If Elected To Second Term

We’re three weeks away from the gubernatorial election and incumbent Pennsylvania Gov. Corbett is trailing big in most polls.

The theme of his campaign has largely been pension reform, and he has been doubling down on that stance lately. On Wednesday, Corbett told a newspaper that, in addition to calling a special legislative session to address pension reform, he would also form a commission to study reform ideas.

From PennLive:

In an interview with PennLive’s editorial board on Wednesday, Corbett talked of forming a commission to study pension reform in advance of calling a special legislative session.

Corbett said he would establish a commission consisting of state and local government officials and union representatives to come up with some recommendations to address pension costs.

Those costs are growing in the state budget by $610 million annually until they plateau at $3.3 billion in 2017-18. Once the commission has completed its work and come up with some recommendations of what might work, he would call a special legislative session to focus on this issue.

“The legislators aren’t experts [on pension reform] by any stretch of the imagination and I’m not disparaging the legislators. This is a very complicated issue. Let’s sit down. Let’s get this studied. And let’s be willing to have the political courage to do it,” he said.

Taking a shot at his opponent who has downplayed the severity of the pension issue, Corbett said, “That’s more than a problem. That’s a crisis.”

The commission would likely look something like New Jersey’s Pension & Health Benefits Review Commission.

See further coverage of Pennsylvania’s governor race here.

Corbett: “Entrenched Interests” Preventing Pension Reform in Pennsylvania

Pennsylvania Gov. Tom Corbett (R) is trailing by double-digits in many polls to opponent Tom Wolf (D) – but his campaign strategy of pushing the need for pension reform appears to be unchanged.

Corbett has been the most vocal critic of his state’s pension system, but most of his fellow lawmakers – and voters, for that matter – have not reciprocated that enthusiasm for major reform.

On Monday Corbett said that “entrenched interests” are preventing pension reform. And those interests, according to the governor, have seeds in both parties.

Reported by the Intelligencer:

“There are entrenched interests out there,” the governor said. “The public sector unions are all against change … There are Republicans that don’t like me. I’m pushing change. It’s very hard to get change in Pennsylvania.”

[…]

Corbett traces the current pension problem to 2001.

That’s when the state Legislature boosted the retirement package for state lawmakers and judges by 50 percent and increased pensions by 25 percent for 300,000 active state workers and school employees. Corbett wants to roll back those increases to pre-2001 levels for current employees — an annual multiplier of 2.0 rather than 2.5 for employees and from 3.0 to 2.0 for lawmakers and judges — and place new employees in a 401(k) style retirement plan.

But the Legislature, backed by the might of public section unions, has stood in his way.

“We said to present-day employees, going forward, that we need to ratchet it back to two,” Corbett said of the annual multiplier. “Did you earn that (2.5)? I don’t think so. You did nothing new.”

Corbett said he favors the state rolling back the benefits and letting the courts decide when the unions sue. The real problem for taxpayers, he said, would occur once the issue landed in court because the judges who benefited from the enhanced pensions would be asked to rule on the matter.

“What judge in this state can hear that case?” he asked. “It’s an economic conflict of interest. … People should be upset with that. I say, let’s try it.”

Corbett re-iterated that, if re-elected, he would call a special legislative session to push through pension reform measures.

Fact Check: Has Tom Corbett Been Shorting The Pension System?

Tom Corbett has used the campaign trail to paint himself as a pension reformer – Corbett, the incumbent governor of Pennsylvania, says the pension system needs to be overhauled and supports a plan to shift public workers into a 401(k)-style plan.

His opponent, Tom Wolf, disagrees. Wolf says the problem isn’t the current system—it’s the current governor. He says the system’s current funding problem stems from Corbett’s failure to make required payments into the system.

The issue was brought up during a debate Wednesday night. WESA reports:

Wolf argued that the pension system itself is not flawed, but that the state needs to put more money into fully funding its pension obligations.

“Governors have not adequately paid into that fund,” Wolf said. “We need to figure out a way to do that, pay that debt, because that balance keeps coming up. I plan to do something about that. I will not keep delaying payment, I will do something.”

Corbett took issue with Wolf’s assertion that his and previous administrations have not adequately paid into the system, and instead said it’s the system itself that needs to be overhauled.

“We do have to, though, bite the bullet and start reforming how we’re paying into that system, rather than continuing to say we’re just going to continue to pay at $610 million new dollars each year for the next, I think it’s 25 years,” Corbett said.

Corbett seemed to dodge the issue of failing to pay the state’s actuarially required contributions (ARC). But Wolf has a point.

Since 2008, Pennsylvania has consistently shorted its largest pension funds.

The state has gone above and beyond when it comes to making payments to the Municipal Retirement System (MRS); but that system is also much smaller than the others.

Both candidates have points here. Wolf is right that Corbett has shorted the pension system. But while making full payments would be a step in the right direction, it wouldn’t solve the system’s funding crisis on its own.

Think Tank: Pennsylvania Lawmakers Need To Reform Pensions – Now

Katrina Anderson, a senior policy analyst and director of government affairs for the Commonwealth Foundation, has published an op-ed in today’s Patriot-News urging Pennsylvania lawmakers to “reform the [pension] system now”.

Ms. Anderson explains her support for a solution similar to Gov. Corbett’s plan, which would move new hires into a 401(k)-style plan. An excerpt from the op-ed:

The first step lawmakers need to take is changing state-level retirement plans for themselves and new teachers and government workers. This would not erase our $50 billion pension debt, but it would prevent the problem from getting worse while protecting families from higher taxes and preserving the system.

Our current pension system has a huge flaw: It’s too easy to boost benefits when times are good and skip payments when they aren’t.

Moving new employees to a well-designed 401(k)-style plan would prevent deliberate underfunding and make “kicking the can down the road” impossible.

Reform would also benefit employees. As workers change jobs—an average of 10 times in a career—retirement portability and personal ownership of investments have never been more important. Such flexibility simply can’t be found in the current system.

But flexibility is the hallmark of 401(k)-style plans, which are also always fully funded—meaning they carry no debt—and offer predictable costs.

Not only has most of the private sector already left the old system behind—including the Wolf Organizaiton, founded by Democratic gubernatorial candidate Tom Wolf—but many states have as well. Since 1996, 18 states have converted to plans which build on the 401(k) model.

There are several bills in the General Assembly that would address this crisis for new employees, including plans that combine aspects of the current system and 401(k)s into what’s commonly called a hybrid plan, as well as reforms addressing the municipal pension crisis.

Conventional wisdom says lawmakers won’t do anything significant shortly before an election. But many statesmen in the legislature are fighting on behalf of retired teachers like Bill Frye to address this issue now.

They should understand—as property tax payers already do—that the stakes are too high to play politics and ignore real reform.

Anderson points out that pension costs have risen more than $600 per household since 2008—and are projected to rise another $550 per household in the next five years.

Read the entire column here.

Corbett Promises Special Pension Session If Re-Elected

Pennsylvania‘s incumbent candidate for governor, Tom Corbett, has made pension reform his campaign’s rallying cry.

But Gov. Corbett’s calls for reform haven’t been met with much enthusiasm. So Corbett announced this week that, if he is re-elected, he will call a special legislative session specifically to deal with pension reform on the state and municipal level.

From New Castle News:

Gov. Tom Corbett, if re-elected this year, plans to call for a special session of the Legislature specifically to deal with Pennsylvania’s pension issues.

He would like to see the meeting address state, municipal and school district concerns.

“I’ve been trying to fight the pension battle,” Corbett, a Republican, said during a meeting with The Tribune-Democrat Friday.

“I don’t know that we’re going to even get the little bit that we’re trying to get now. I’ve already announced, I’m going to call, in my second term, right away, a special session on pensions; not just the state pension, we might as well bring in the municipal pension, too, because I can tell you, all municipalities are coming to us, saying, ‘Take a look at this.’ Is that a big one to bite off? Yes. But, if we don’t do it, who’s going to do it? I know one thing, my opponent (Tom Wolf ) is not going to touch it.”

Pennsylvania has $47 billion in unfunded pension liabilities, according to the state’s budget office.

Standard & Poor’s and Fitch Ratings both cited pension concerns when they dropped the state’s general-obligation debt rating this week.

“The downgrade reflects our view of the state’s diminished financial flexibility and growing expenditure pressures due to inaction on pension reform and limited revenue growth,” S&P said in its report.

Corbett wants to pass a plan that would shift new hires into a hybrid-type plan that more resembles a 401(k) than a defined benefit plan.

Pennsylvania Candidate Wolf Doubles Down on Pension Stance

Pension reform has been a center-stage issue since May in the race for Pennsylvania governor.

During an interview this week with the Philadelphia Public School Notebook, Democratic candidate Tom Wolf forcefully doubled down on his position that pension reform isn’t the state’s fiscal priority. The exchange:

Q: How is the escalating cost of pensions impacting school financing in Pennsylvania, and what do you think should be done about it?

A: Our current pension situation is the direct result of almost 10 years of leaders in Harrisburg kicking the can down the road and the state paying less than its fair share. What we’re seeing from Gov. Corbett is more political games – he is pushing a plan that creates no immediate savings for taxpayers.

As governor, I will let Act 120 [a 2010 law reducing pension benefits to new employees] work and create innovative solutions that are fiscally responsible and fair and beneficial to taxpayers and future employees.

A further explanation of how the two candidates differ on the issue of pensions, from the Times-Herald:

Corbett says the burgeoning cost of Pennsylvania’s public pensions is a crisis that requires prompt, decisive action. Wolf argues that it’s a problem that can be resolved in the years ahead.

Corbett wants to scale back pensions for future school and state employees as a meaningful step toward savings. He says the taxpayers’ share of the pension costs for current employees — $2.1 billion this year — is crowding out funding for other programs and helping drive up local property taxes.

Wolf contends that the pension problems are partly the result of the state contributing less than its fair share of the costs for nearly a decade and that a 2010 law reducing pension promises to future employees and refinancing existing obligations needs more time to work.

Act 120 was a 2010 law that reduced pension benefits for some employees but kept intact the current defined benefit system. Wolf has been adamant that the law needs time to work.

Corbett wants to shift new workers into a 401(k)-type plan.

Photo Credit: “TomWolfYuengling” by Tom Wolf. Licensed under Creative Commons Attribution 2.0 via Wikimedia Commons

Pennsylvania Lawmaker Speaks Out Against “Irresponsible” Reform Efforts

Pennsylvania Gov. Tom Corbett spent most of his summer traveling the state and touting the need for pension reform. The legislators are now back from their breaks, but pension reform bills continue to gather dust.

Republicans have been vocal about Democrat lawmakers’ unwillingness to work with the reform bills currently on the table. Now, one Democratic lawmaker has clarified why her party refuses to engage with the Republicans. Rep. Michelle F. Brownlee (D) writes in the Patriot News:

Republican leaders have already acknowledged the real pension problem is debt, not benefit costs. The solution to pension debt is the same as the solution to credit card debt: Pay the bills. Yet the Corbett/Republican pension proposal focuses on cutting benefits for future workers.

Act 120 of 2010 already cut new worker benefits starting in 2011 by nearly 50 percent, saving Pennsylvania $34 billion. Further cuts will sacrifice the retirement security of tens of thousands of future teachers, nurses, first responders, counselors and other public workers. The strain on safety net programs would stress future state budgets. Why do that when the Corbett plan offered by the Republicans, by their own admission, will do nothing to pay down the pension debt any faster?

If “reformers” truly believe we need to pay down the unfunded liability more quickly than Act 120 does, then they need to offer additional revenue so the state and school districts can do that.

It’s irresponsible, and a huge disservice to Pennsylvania, for those who do or should know better to continue misstating the pension problem and misleading the public about the solution.

She was responding to an editorial lambasting both parties, written last week by Dwight D. Weidman, vice-chairman of the Franklin County Republican party. He wrote in the Patriot News:

A very wise Pennsylvania politician recently opined, “In Pennsylvania, the unions buy Democrats, and rent Republicans”.

No doubt what the author of this statement was thinking about when he made it was the fact that close to twenty Republican legislators have steadfastly opposed any attempt to help enact urgently-needed reform to Pennsylvania’s public employee pension system, because of their ties to public sector unions.

To be sure, not a single Democrat legislator is willing to step up and save the state from certain bankruptcy, but that shouldn’t really matter, since the Republicans control both the Senate and the House and could fix our pension debt crisis, but won’t, and that is disturbing.

[…]

If lawmakers fail to act, this issue will, in time turn Pennsylvania into a large-scale version of Detroit, with both businesses and population fleeing ever more burdensome taxes that will be needed to fund the growing pension obligations.

Weidman criticized the 16 Republican assemblymen who “won’t get on board” with pension reform efforts. Many of those lawmakers receive campaign support from various unions.

Pennsylvania Lawmakers Return From Break, But Pension Reform Remains On Backburner

Pennsylvania lawmakers returned to the capitol this week to convene for the fall legislative session. While they were out, Gov. Tom Corbett traveled around the state and continued to try to drum up public support for pension reform and his re-election.

But the pension reform bill currently in the House seems unlikely to go anywhere; lawmakers now have other bills on their mind. Reported by the Pittsburgh Post-Gazette:

Legislators returning today to the Capitol are expected to take up several bills during their month-long stint before the election, but there is little sign yet that the pension overhaul promoted by Gov. Tom Corbett will be among those headed to his desk.

House Republicans’ efforts to pass the legislation remaking retirement benefits for future state and public school workers consumed significant energy in the lead-up to the signing of the state budget in July. Mr. Corbett urged legislators to send him the bill, which would limit the defined pension benefit while adding a 401(k)-style plan, but with Democrats opposed, Republicans in the House were unable to rally enough votes from their own ranks.

The Republican governor embarked on a statewide tour to emphasize the costs of the existing systems, while House Republicans say they met to discuss pensions throughout the summer.

“We’re still within striking distance,” Steve Miskin, a spokesman for House Majority Leader Mike Turzai, R-Marshall, said last week.

If the bill were to clear the House, it would face another hurdle in the Senate, where members instead approved a bill to move elected officials from the traditional pensions systems to 401(k)-style defined contribution plans.

The bills that are taking precedence over pension reform include a proposal to increase taxes on cigarettes and legislation surrounding ride-sharing programs such as Uber and Lyft.

Democrats are also working on raising the state’s minimum wage and securing more education funding.

Photo: Chesapeake Bay Program via Flickr CC License

Video: Pennsylvania’s Pension Predicament

The 2014 CSG National Conference was held last month, but videos of the presentations are just beginning to surface.

This presentation, on public pensions in Pensylvania, was given by state Senator Pat Browne (R).

Sen. Browne has previously proposed and supported legislation to shift workers into a 401(k)-style plan. In 2012, he said:

“Significant policy decisions regarding Pennsylvania’s pension system must be made soon,” Senator Browne said. “Without significant changes in the design of Pennsylvania’s pension system, including a switch to a defined contribution system, the long-term costs will be unaffordable to Pennsylvania taxpayers.”

“Over the past few decades, virtually all of the private sector has shifted to defined contribution retirement plans,” Senator Pileggi said. “It’s time for Pennsylvania government to do the same.”

“A switch to a defined contribution plan will benefit Pennsylvania taxpayers by forcing fiscal discipline,” Senator Corman said. “Retiree benefits will become predictable and sustainable, costs will be easily defined, and future liabilities will be fully funded; it’s an excellent choice prospectively.”

Browne is a board member on the Public Employee Retirement Commission and the Public School Employees’ Retirement System board

Pennsylvania Gov. Corbett, Trailing in Polls, Says He Will “Force Action” on Pension Reform

There’s less than two months until Pennsylvania residents will decide who becomes their next governor, and incumbent Tom Corbett finds himself trailing in polls by 15 points to Democratic challenger Tom Wolf.

Pension reform has been a central facet of Corbett’s campaign, and he doubled down on that stance Wednesday when he said he would “force action” on pension reform if he is re-elected. From the Philadelphia Inquirer:

“If I don’t get reelected for four more years, there will be nothing done about this, because Mr. [Tom] Wolf says there is not a pension problem,” Corbett said.

If he wins a second term, Corbett said, he would call a special session of the legislature early next year to force action on pensions, including for municipal workers. He said Scranton is distressed because of unaffordable pension obligations and predicted some school districts in Pennsylvania will come “doggone close to bankruptcy” without a solution.

Pension360 has previously covered polling data suggesting Pennsylvania voters are much less engaged on pension issues than they are on other topics, such as education. Corbett acknowledged as much on Wednesday in a chat with the Philadelphia Inquirer’s editorial board:

In the governor’s view, he is hurting politically because he has taken on issues “no one else will touch.” He mentioned his efforts to cut future pension costs, to end the system of state-controlled liquor stores, and to privatize management of the state lottery. The legislature, controlled by fellow Republicans, has stymied Corbett on all three priorities.

“If I had been looking toward reelection, do you think I would have taken on pensions, when all it does is get everyone upset?” Corbett asked. He added that he hoped voters would give him credit for trying.

Tom Wolf does not support Tom Corbett’s pension reform plan. In a statement Wednesday night, a Wolf spokesman characterized Corbett’s plan as “kicking the can down the road”.

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712