Update: Wolf responds to lawsuit over pensions watchdog

Written by Emily Previti/Keystone Crossroads | Feb 18, 2016 11:39 AM

David Carmichael, director of Pennsylvania State Archives, looks though one of many boxes that holds permanent pension records in Harrisburg, Pa. (Lindsay Lazarski/WHYY)

(Harrisburg) -- Gov. Tom Wolf wants Commonwealth Court to back his decisions that have left the state legislature without what two lawmakers say is a critical independent opinion in debates over pension bills.

The Office of General Counsel and Attorney General's Office filed the response Wednesday. 

Rep. Seth Grove, R-York, and Stephen Bloom, R-Cumberland filed the suit Feb. 12.  That's the same day the Public Employee Retirement Comission, or PERC, closed, as per instructions in a letter from Wolf's chief of staff Mary Isenhour.

It's also the day the Office of the Budget struck an interagency agreement, included in Wolf's response, to take on three PERC staffers so they could keep handling the monitoring and certification of the financial reports filed by thousands of local pension funds every year.

Wolf's budget unveiled last week quotes a savings of $605,000 under this new arrangement, effective Monday. Before that, PERC's full complement of seven people already was down to five becuase the budget impasse prevented the agency from filling two vacant positions.

PERC Executive Director James McAneny said previously the agency's receptionist would be transferred this week, but it's unclear where. McAneny had departed when Grove and Bloom's joint statement about the lawsuit went out last week.

"GONE FISHIN'.  Really.,"  read his automated email reply to a request for comment.

He said previously he was going back to work Monday as an attorney for police unions, which he did before joining PERC decades ago.

State law also requires the agency to provide actuarial notes to lawmakers about bills dealing with local pensions, as well as the statewide retirement systems for public school teachers and commonwealth workers.

Wolf says PERC's analytic role is redundant, though, and state aid could be handled by another agency, though. So he used a line item veto to strip the agency of funding at the end of 2015. His budget proposal for next year unveiled last week highlighted the fact that PERC's "abolished."

Yet his reponse to the lawsuit denies the agency's been eliminated, but merely defunded.

Wolf's spokesman Jeff Sheridan declined to comment further, saying the 68-page response speaks for itself.

Sheridan's previously cited the Pennsylvania Public Television Network Commission as an example of an agency that still exists in statute, but shut down after being defunded in 2009.

The lawsuit argues PERC can't be decommissioned, legally, unless state law's changed or repealed, which only the legislature can do.

In addition to the law creating PERC, there are rules on the books that require the legislature to get an actuarial note from PERC or wait 20 days before moving on any pension bills for final consideration.

For example, one pensions bill that reached the actuarial note stage Jan. 21 won't be eligible for final consideration by the House until May 4, according to the lawsuit.

Citing the lag, Grove has said he thinks Wolf's trying to prevent pension reform.

Wolf's response says the lag wouldn't go on that long, that the lawmakers are wrong in the way they're defining a legislative day. And, the resonse notes, the legislature can always amend the law to eliminate the requisite wait time.

In addition to legislative input, PERC administers nearly a quarterly billion dollars in state aid every year.

Those duties and three PERC staffers are being transferred to the Office of the Budget, according to the joint release from Bloom and Grove.

Sheridan has said the state Auditor General's office or Pennsylvania Municipal Retirement System might permanently take over administration of pension aid to municipalities. Current and former officials at both agencies say they're not set up to administer state aid, at least not currently. Transferring duties to either also might entail changing state law, which would require the cooperation of the legislature.

If aid's late getting to municipalities, they might have to pay penalty fees for being late making their minimum annual pension payments.

Grove, Bloom and others also say they're open talking about better ways to carry out PERC's duties - but someone has to, they say.

"We rely on ... PERC as an independent, nonpartisan agency," Bloom says. "The reason the law was passed is no one can do this calculation on their own, unless you're a trained actuary, so we rely on PERC as an unbiased source. What's this going to mean?"

Some say PERC's not completely independent because it's funded by the legislature. And its executive director James McAneny worked decades ago as a lawyer for police unions, a role he says he'll resume after Friday. Lobbyists and policy analysts are hard-pressed to point to examples of McAneny's affiliation affecting PERC's analysis, though, and say they value his plainspoken pension expertise.

Bloom is also sponsoring legislation that would restore funding to PERC. House Bill 1793 has to go through the House Appropriations Committee again before making it to a floor vote and then, potentially, heading to the state Senate for consideration.

Editor's note: this post has been updated to include information about Gov. Wolf's response to a lawsuit.

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