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Legislature recesses without Pension System changes

07.30.13

JULY 2013, Scranton/Wilkes-Barre/Hazleton Edition of The Union News

Legislature recesses without Pension System changes

BY PAUL TUCKER
THEUNIONNEWSSWB@AOL.COM

REGION, July 1st- The Pennsylvania State General Assembly did not make changes to the state’s public employee pension system before they recessed for the summer break. Changing the pension system was a major priority of Pennsylvania Republican Governor Tom Corbett.

Governor Tom Corbett solution for reducing the pension cost of state workers included freeing-up money and putting it back into programs that he slashed in previous state budgets.

However, the Pennsylvania State House of Representatives and the Senate voted on June 30th, with only two hours to spare before the midnight deadline, a state budget that did not include the pension system changes Mr. Corbett pushed. Under Mr. Corbett’s plan the employee retirement funds would be weaken and eventually cost state taxpayers $170 million more a year and add approximately $5 billion to unfunded pension liabilities by 2019 and more afterward.

The public sector unions in Pennsylvania have been battling with Mr. Corbett as he attempted to cut retirement benefits.

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, noted 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.

The state caused the pension problem by increasing employee benefits during boom years while reducing school districts and government contributions to the pension fund.

Mr. Corbett linked pension cost cuts to restoring funding cuts to education that he has made over the past several budgets to get more school districts across the commonwealth to support his plan.

However, under the budget bill passed by both chambers spending for basic education was increased by around $122 million despite the pension system not being address, that Mr. Corbett proposed.

“In reality, it is Covernor Corbett’s prior budgetary decisions that are the true cause of Pennsylvania’s budget problem. Governor Corbett made a conscious policy decision to provide more than $800 million in corporate tax breaks, including the capital stock and franchise tax and bonus depreciation credit, which cost the state $760 million, more than the projected pension debt owed in 2013-2014 fiscal year,” stated Mr. Crossey.

A report suggest there is a $19.7 billion unfunded liability of the Pennsylvania Public School Employees’ Retirement System and the Pennsylvania State Employees’ Retirement System, which covers more than 100,000 active employees and provides for 100,000 retirees as well as their beneficiaries.

Mr. Crossey added that just two years ago public employees in Pennsylvania helped pass Act 120 to pay down the debt employers owe the pension systems. Act 120 was passed by the General Assembly in 2010 to prevent a 500 percent increase in 2012 of the government’s contribution to state and school employee pension plans.

The legislation lowered the amount a pension increased a year of employment from 2.5 percent of pay to 2 percent, and also raised the time of vesting from five years to ten years and made teachers wait until they are 65 years old to start receiving pension payments. Previously teachers could begin receiving benefits at 62 years old. The new rules applied to newly hired teachers. Also, the legislation forces employees, the state government, and school districts to pay more into the funds when the market drops.