The Meadville Tribune
Republican state Rep. Brad Roae of Crawford County on Tuesday joined Gov. Tom Corbett and other legislators at a Capitol news conference to unveil a plan to reform the commonwealth’s two public pension systems.
“Failing to address the public pension problem will only make it worse,” Roae said.
The commonwealth oversees two public pension systems. The State Employees’ Retirement System (SERS) provides pensions for state workers. The Public School Employees’ Retirement System (PSERS) provides pensions for teachers and other school employees.
SERS and PSERS together face an unfunded liability of $47 billion according to Corbett, meaning that pensions promised to existing employees and retirees exceed projected revenues by more than 1.5 times the annual state budget of approximately $28 billion. That unfunded liability is expected to jump to more than $65 billion by 2018.
The commonwealth currently contributes approximately $1.5 billion combined to the two pension systems. Without action, that contribution is expected to nearly triple to $4.3 billion by 2016, according to Roae.
School districts currently contribute a combined $1 billion per year to PSERS. That would double to approximately $2 billion by 2018 if no action is taken, Roae says.
“The current pension system is unsustainable,” Roae said. “Higher pension costs drain the state budget and lead to local school district property tax increases. We simply cannot afford to maintain things as they are.”
More than one-third of Pennsylvania’s school districts have applied for exceptions to increase property taxes above a state-imposed limit to help offset pension costs.
The reform would not change pension benefits for current retirees. It also would not change benefits already earned by current state workers and teachers. It would change the way current legislators, teachers and state workers earn future benefits. It also would enroll new employees and teachers into a new retirement system more in line with what is traditionally available in the private sector.
Together, the reforms would result in more than $1 billion in savings over five years, Roae says.
“The sooner we act, the sooner we can begin to chip away at the large pension problem facing Pennsylvania taxpayers,” Roae said. “Beside the annual state budget, this is perhaps the most important issue facing the General Assembly. How we address the public pension issue will largely determine the future of our commonwealth for years to come.”