Pension overhaul part of Governor Corbett's budget

Written by The Associated Press | Feb 4, 2014 1:09 PM

(Harrisburg) -- Governor Corbett is asking lawmakers to approve changes to Pennsylvania's public employee pension system in an effort to save $300 million for the state and school districts next year.

The Republican governor made the appeal during his budget address to lawmakers today.

Corbett, who's running for re-election, says inaction is unwise and unfair to children and the schools. Rising pension costs is one of Corbett's biggest fiscal challenges, and he says it's also driving up local property taxes.

Last year, Corbett proposed reductions in pension benefits for future and current employees, but it fell flat with lawmakers. Now, he wants to reduce pension benefits just for future employees, but he hasn't said how.

To lower costs more immediately, he wants to postpone some pension payments into future years.

Highlights of the governor's spending blueprint for the 2014-15 year that starts July 1


-- Increases overall state spending by 3.3 percent to $29.4 billion.  
-- Generates more than $30 billion through taxes. fees and other revenue sources



-- Contains no new taxes, but Corbett signed two major new revenue sources approved late last year _ higher fuel taxes and motor-vehicle fees to finance transportation work and the legalization of  small games of chance _ and they will be in effect for their first full year.  
-- Continues to phase out the Capital Stock and Franchise Tax, which was targeted for elimination this year but is now slated to expire in 2016.  
-- Reduces the time period in which unclaimed property must be held by outside institutions from five years to three, generating $150 million in one-time revenue.  
-- Allows limited natural-gas drilling on state-owned parks and forests if they do not require any additional surface impact, generating $75 million in immediate revenue and additional future royalties.

-- Combines $240 million in new money with the current funding for the decade-old school accountability block grant program to create a proposed $341 million Ready to Learn block grant program that will provide a menu of options that school districts on how they can use the money.  
-- Provides $25 million through the Pennsylvania Higher Education Assistance Agency for new merit-based Ready to Succeed scholarships for students pursuing two- or four-year post-secondary degrees.  
-- Eliminates a provision that allows charter schools to collect double payments for employees' pension costs, saving more than $62 million.  
-- Increases special education funding by $20 million.  
-- Increases spending on early-childhood education by $10 million, providing access to pre-school programs for nearly 1,700 additional children.  
-- A $10 million increase for a ``hybrid learning'' program that encourages educators to apply technology to improve student performance, allowing an additional 100 schools to participate.  
-- A $500,000 increase for public libraries.  


-- A $5 million increase for PA First to expand job training and other activities that help businesses seeking to relocate or expand in the state.  
-- Injects an additional $1 million into a $5 million Targeted Industry Program, which provides grants to students seeking certification in high-demand industry such as energy, diversified manufacturing and food production.  
-- A $1 million increase in state funding that will leverage nearly $4 million in federal money to expand on-the-job training for young people with disabilities through the state Labor and Industry Department.  
-- A $500,000 increase for the Partnership for Regional Economic Performance to expand technical consulting to manufacturers seeking to move their overseas operations to Pennsylvania.  


-- Reduces an anticipated $610 million increase in the state's share of pension costs for state and school employees by postponing some immediate payments while reducing benefits for future public employees to cover that cost. It is expected to save the state and school districts about $300 million.  
-- Transfers $225 million in private equity investments and cash reserves from the Tobacco Settlement Fund and Health Venture Investment account to the school employees' pension fund.  


-- Projects $125 million in savings next year from his Healthy PA plan, which includes proposed reforms to the state's Medicaid program and his proposal to use federal Medicaid expansion money to buy private health insurance for an estimated 500,000 newly eligible people under the federal Affordable Care Act.  
-- Doubles funding for the community-based Health Care program, providing $4 million for four new facilities.  
-- A $4 million increase to recruit and retain physicians, dentists and other health-care professionals in rural parts of the state by repaying their education loans. 


-- A $45 million increase to repair and improve state parks and forests.  
-- Nearly $14 million to finance four new Pennsylvania State Police cadet classes and 350 new troopers.  
-- Nearly $10 million to provide a single access point to collect, coordinate and report child abuse and neglect cases.  
 -- An increase of $1.4 million, or 10 percent, for domestic violence programs. 

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