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Governor trying to reduce pensions for state workers/teachers - abc27 WHTM

Dauphin County

Governor trying to reduce pensions for state workers/teachers

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HARRISBURG, Pa. (WHTM) -

It was a briefing for the nerdy—for those with pocket protectors and black horn-rimmed glasses with tape over the nose—policy wonk.

It was about reforming pensions for public sector employees, state workers and public school teachers.

But before your eyes glaze over, hear this: it was arguably the most important briefing on the most important issue facing the state.

It is estimated Pennsylvania's unfunded pension liability is $41 billion over the next few decades. The state and school districts are on the hook for it. And to do nothing, many say, would mean painful cuts to programs and services, increased taxes, or both.

Which brings us back to Tuesday morning's briefing on the fifth floor of the Capitol.

There were lots of details but the governor's reform plan is basically this:

- Those hired after 2015 would be put into a defined contribution plan—think 401k—and away from a defined benefit plan.

- Current workers' pensions would be tweaked. There would be a cap on the maximum yearly amount they could get. The calculating formula would change. It would be based on the highest five years salary, instead of the highest three years salary currently employed. The multiplier would be reduced from 2.5 to 2.0. Lump sum payouts with interest would still be allowed. All of these would likely reduce the retirement take-home number for most workers.

If you don't get it—and I don't blame you—it likely doesn't effect you. If you are a state worker or public school teacher, you understand the ramifications, and you probably don't like them.

Budget Secretary Charles Zogby, who hosted the briefing and is pushing the reform plan, insists he's not robbing public employees of their retirement.

"We're not taking anything away from you that you've already earned and the reforms we're proposing go to preserve the long-term health of the system."

It's important to reiterate that if you are already retired, your benefits will not be touched at all.

Zogby says under Corbett's plan employees would be able to take out every dollar they've contributed with interest. It's called a lump sum payout. But the plan is taking its lumps from several directions. Democratic lawmakers call it unconstitutional to change an employees retirement after it's been agreed to.

"To base budget decisions on something that may end up being thrown out by the courts would cause a huge problem for Pennsylvania down the road," said House Democratic Appropriations Chairman Joe Markosek. "My gut tells me none of this passes."

Unions, understandably, are also upset. They're especially angry that their members have paid in their fair share to the system all along. When the markets were soaring, the state and school districts stopped pitching in their portion for pensions. Now there's a problem, and the folks who didn't cause it are being asked to sacrifice to fix it.

"Our members did pay for a lot of years and they continued to pay," said Wendell Young, president of the United Food and Commercial Workers union. "They earned those benefits and they played by the rules. Now this governor comes along and kind of forgets that the state got a pass."

But Zogby says he's fighting for taxpayers to reform a broken system. He reminds that every dollar that's paid by the state or school districts to fund a retiree's pension, isn't going to services or programs.

To do nothing, he says, would mean sharp tax increases or deep cuts to services.

Representative Glen Grell (R-Cumberland County) agrees. "Those numbers are staggering," Grell said of the pending payments the state and school districts must make if there are no changes.

Grell is as close to a pension expert as there is in the legislature. "Thirty percent of salary has to go to pension contributions five years from now if we do nothing. It's unaffordable."

Grell said next year, for example, Cumberland Valley School District will have to direct an additional $1.2 million to pensions.

Nearly everyone at the Capitol admits pension reform is necessary but getting them to agree on a plan is still a long shot. Any attempt to tweak the pensions of current employees will be challenged in court, which takes time.

A high-ranking House Republican was asked if he thought the governor's pension plan could pass. "I'd rather not comment on that," he said with a smile and hustled away.

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