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Pennsylvania public employees pension plans under attack

02.26.13

MARCH 2013, LEHIGH VALLEY Edition of The Union News

Pennsylvania public employees pension plans under attack

BY PAUL TUCKER
THEUNIONNEWSABE@AOL.COM

REGION, February 15th- The Pennsylvania public pension cost issue is heating-up in Harrisburg with Republican Governor Tom Corbett announcing he wants to reduce the pension cost to free up money and put it back into programs he has slashed in previous state budgets.

Governor Corbett’s Budget Secretary, Charles Zogby, released a report of the long-term sustainability of the Pennsylvania Public School Employees’ Retirement System and the Pennsylvania State Employees’ retirement System.

A recent report by the National Council on Teacher Quality (NCTQ) estimates teacher pension plans nationwide have almost $325 billion in unfunded liabilities. In Pennsylvania it is estimated there is an unfunded liability of $19.7 billion. The report suggests the pension problem is worse due to unrealistic assumptions and projections about what returns will be made on investments.

Mike Crossey, the President of the Pennsylvania State Education Association (PSEA), which represents approximately 190,000 active and retired school teachers and employees in Pennsylvania, reacted to the Keystone Pension Report. Mr. Crossey noted that the report stated what PSEA has said all along, that the public employees of Pennsylvania and taxpayers did not create the pension problem.

Mike Crossey emphasized that teachers, nurses, and other public employees across the Commonwealth already pay for a significant portion of their pensions, and have made their contributions on time. The pension shortfall was caused by politicans who failed to make their appropriate contributions to the pension system. Many schools districts across Pennsylvania have not made their contributions to the pension system.

“To blame Pennsylvania’s budget problems on debts employers owe to the pension systems is to make a scapegoat of working people who have contributed to their Pensions, year in and year out,” Mr. Crossey stated.

The National Council on Teacher Quality report notes Pennsylvania’s pension system is 75.1 percent fully funded, better than 28 of the 50 states. The most unfunded is Indiana at 44.3 percent of liabilities.

Some states, including Pennsylvania, have attempted to change the pension system. In 2010 the Pennsylvania legislature passed Act 120, which lowered the amount a pension increases a year of employment from 2.5 percent of pay to 2 percent. Also, the vested time was raised from five years to ten and required most teachers to wait until they are 65 to start receiving pension payments. The new rules apply to newly hired teachers.

The PSEA released a study of their own which indicated the major contributing factors of the pension crisis was investment losses that were incurred in two recessions within one decade and employer underfunding.

Mr. Corbett has linked the pension cost cuts to restoring funding for education and social programs, a proposal he hopes will get members of the General Assembly to support the pension cuts.

Mr. Crossey emphasized that the Keystone Pension Report vague suggestionsto change the future retirement benefits of current workers are unconstitutional, unethical, and won’t solve the problem since it would not address the pension debt.

The Pennsylvania State Employees’ Retirement System covers more than 100,000 active employees and provides for 100,000 retirees as well as their beneficiaries.

Former Governor Ed Rendell signed Act 120 into law that preserved all benefits now in place for current members however, mandated benefit reductions for future members effective January 1st, 2011. Mr. Corbett was aware of the pension cost problem when he took office in 2012 but he gave tax credits to businesses which has made the problem worse.

Attorney General Kane says Lottery deal violates state constitution

02.26.13

MARCH 2013, LEHIGH VALLEY Edition of The Union News

Attorney General Kane says Lottery deal violates state constitution

BY PAUL TUCKER
THEUNIONNEWSABE@AOL.COM

REGION, February 15th- Pennsylvania Democratic Attorney General Kathleen Kane on February 14th rejected a contract awarded by Republican anti-union Pennsylvania Governor Tom Corbett that was to let a British company manage the Pennsylvania Lottery System.

The Corbett Administration awarded the British lottery company, Camelot Global Services, a 20-year contract to privately manage the Pennsylvania Lottery System before the Pennsylvania Senate Finance Committee hearing was even held on the privitization plan. Mr. Corbett awarded the contract to Camelot Global Services on January 11th, three days before the public hearing was to be held by the Senate Committee.

The American Federation of State, County and Municipal Employees (AFSCME) Union represent 170 of the 230 state workers employed by the lottery system.

The office of the governor released a summary of his intension and the terms and conditions of the Private Management Agreement (PMA) which includes the suggestion that privitizing the system would “provide more reliable and predictable revenue to ensure the continued strength and viability” of the Pennsylvania Lottery system.

The Corbett Administration released a summary in 2012 of his intent of privitizing the lottery system, which had $3.5 billion in sales last year, stating the PMA will be a contract between the Commonwealth of Pennsylvania and a private industry expect structured to assure funding to support lottery-funded senior citizen programs, the summary stated.

However, what Mr. Corbett’s summary did not state is why he found it neccessary to privitize the state lottery system which makes millions of dollars for the Commonwealth each year that supplies funds for many programs for the elderly.

The lone bidder for the PMA was Camelot Global Services of Great Britain, however apparently two other companies pulled out for unknown reasons.

Camelot Global Services has guaranteed him they will double lottery profits over 20 years. These are profit thresholds that must be achieved by the manager in order for the manager to earn any incentive compensation.

Mr. Corbett is attempting to sell the Pennsylvania Lottery System without any checks and balances or involvement with the Pennsylvania General Assembly.

Mrs. Kane stated the Camelot deal violated the state constition and other parts are not authorized by state law, including the expansion of gambling that the agreement would permit. Under the contract Camelot would be allowed the expansion of gambling with the inclusion of keno and online games. Her power as Attorney General halted the completion of the deal because of the office to review the legality of state contracts.

Mr. Corbett has since been granted a extension by Camelot Global Services until February 23rd to respond to Mrs. Kane decision and gives him time to seek implementation of the deal.

AFSCME District Council 13 in Harrisburg, praised Mrs. Kane decision.

David Fillman, Executive Director of AFSCME Council 13 questions why the Corbett adminstration wanted to fix something that was not broken for a so-called guarantee from a foreign-run company.