State House Sound Bites

Capitol reporter Mary Wilson covers Pennsylvania politics and issues at the Pennsylvania state capitol.

Talk of pension reform on the horizon

Written by Mary Wilson, Capitol Bureau Chief | Sep 5, 2012 4:15 AM

It’s never too early to start planning for retirement. But as state lawmakers gear up for their brief fall session, they’re hoping it’s not too late to start reforming state employees’ retirement plans.

Gov. Corbett has compared the state’s pension debt to a Pac-Man poised to chomp away at the rest of the state’s budget.  Expect to hear more from state lawmakers mulling how to shrink the Pac-Man.

Republican Senator Pat Browne of Lehigh County is part of an effort to draft legislation reforming the state’s pension plans for employees and come up with a way to pay down what the state owes to its pension fund.  Browne says the stakes couldn’t be much higher.  

“We’re potentially looking at tax increases at the state level.  It’s very likely we’ll look at tax increases for school districts – and either one is not acceptable,” he said.

The state’s pension systems are underfunded by about $40 billion.  The current budget allocates $1.1 billion to pay down that debt.  The payment is expected to grow to $4 billion by 2016.  

Lawmakers are also considering proposals to change state employee’s pension plans to resemble something like a 401K-style plan.  “Our platform for providing pensions to current employees is something that if we look to the future is very difficult to justify because we can’t afford to build any more debt,” said Browne.  At a recent hearing in Harrisburg, state House lawmakers heard testimony confirming that such a move, alone, would not reduce the $40 billion liabilities.  But Browne said the idea is to keep that sum from getting any larger. 

“The challenge is, is that we need to make sure that those payments that we’re obligated to make don’t escalate further – and they will if we don’t have a platform that can’t build additional debt,” he said.

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