HARRISBURG, Pa. (WHTM) – Time, as the saying goes, is money.
Nowhere is that truer than in Pennsylvania’s mounting pension debt.
“It’s growing, if you haven’t figured it out, at $143 a second,” Barry Shutt of Lower Paxton Township said.
Shutt, a pensioned retiree himself, commissioned a pension clock similar to the national debt clock in New York City. He paid for it and positioned it just outside the Capitol cafeteria. That’s a fitting spot because pension debt has an insatiable appetite for tax dollars.
“It’s at $4.5 billion a year and it’s jeopardizing the future economic growth of Pennsylvania,” Shutt said. He is a citizen activist who has hung around the Capitol for two years trying to cajole lawmakers into focusing on the state’s pension problem.
Pensions are the elephant in the budgetary room, but both Elephants (Republicans) and Donkeys (Democrats) have mostly ignored it.
“The pension doomsday clock is inching towards midnight,” Eric Epstein of Rock the Capital said at a recent unveiling of the pension clock. “Make no mistake, to do nothing is to knowingly blow up our children’s future. “
“Shame on you. Shame on you,” Epstein said to lawmakers and the governor, who just completed another budget without addressing the pension issue.
The crisis dates to 2001 when benefits to retirees were enhanced without an additional revenue stream to support those increases. School districts and state government then for a decade made less than the minimum payment on their pension credit cards. Add in a recession that ravaged investments and ridiculously rosy projections on those investment returns, and you’ve got a sinking pension ship.
Rick Dreyfuss is an actuarial consultant. Here’s how he describes the problem: “We are dealing with overstated assets and understated liabilities coupled with poor funding practices.”
And a poor ability by legislators to wrestle the problem into submission, critics say. They point out that lawmakers voted for the pension boondoggle, and benefit from it, but have thus far failed to fix the boondoggle.
“We are committing intergenerational theft by forcing future taxpayers to bear burdens from the past and present for which they may have received no benefit,” Rep. John McGinnis (R-Blair) said.
McGinnis is as close as the Legislature comes to an actuarial and investment expert. He taught finance at Penn State. His bill would steer an additional $2 billion a year toward pensions for the next 20 years. Mathematically, he says, it’s a simple problem to solve.
Politically, though, it’s near impossible. He says Democrats want to raise the money but also want to spend it on other things and not pay the bills they’ve already accrued. Republicans, he says, don’t want to raise the taxes that might be necessary to pay the bill.
In an election year, it’s tough to tell constituents you’re raising their taxes to make good on past promises to retirees. Politicians of both parties prefer to present big checks that pay for new stuff and earn them votes, McGinnis acknowledges.
And then there’s pension law, which doesn’t seem to help its debt problem.
“I am not entitled to a pension,” Rep. Cris Dush (R-Indiana/Jefferson) said flatly.
Before coming to Harrisburg in 2014, Dush was a 22-year state employee, mostly as a correctional officer. He earned a pension for that service and intends to collect it, but when he was running for the state House he promised not to take a pension as a lawmaker. He doesn’t want it, he says. He asked not to be included in the pension system. He says he was angry when he learned that the law doesn’t allow former state employees opt out when they rejoin the state’s employ.
“It gave me a $10,000 bump in final average salary,” he said. “I think that is appalling. I have no interest, no desire, to be a part of that. I’m not gonna keep contributing to the problem.”
Dush says he’s working on legislation to let folks opt out in similar circumstances, but he also believes lawmakers aren’t eligible for pensions. The state Constitution, he points out, allows for salary and mileage only. There’s no mention of pensions under the lawmaker compensation section.
Bringing it up may not make Dush popular among his peers, but he says it’s his constituents he’s worried about.
“It’s their wallets that this is being taken out of and I refuse to be sticking a gun to somebody’s head, saying you’re gonna be paying me for the rest of my life for something I have no constitutional right to have,” he said.
But others do have a constitutional right to their pensions and taxpayers are obligated to pay them. They can now see how high the bill is soaring.