State House Sound Bites

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

House Dems weigh in to re-frame pension crisis

Written by Mary Wilson, Capitol Bureau Chief | Jan 29, 2013 6:32 PM

State House Democrats are calling the governor’s search for pension reforms wrong-headed, because rising costs are on track to subside. The key now, says the minority caucus, is to find new revenue to pay for the debt connected to the state’s pension plans.

Gov. Corbett has repeatedly said since last summer he wants to find a way to tamp down rising pension costs. Next fiscal year, state and public school employee pension costs will require more than $500 million in additional money just from the state’s General Fund.

“Right now we put $1.6 billion from the General Fund, which is at about $27.6 (billion) right now, into pensions,” said Corbett on the Radio PA show, Ask the Governor. “In 2016-2017, not that far from now, we have to put $4.3 billion in.”

But state House Democrats say that’s taking a short-term view of the problem. Bernie Gallagher, a budget analyst with the House Democrats, said based on projections, rising pension costs will taper off in about seven years – and then decline.

“If you have a very short time horizon that you’re interested in, it’s a big problem,” said Gallagher about the pension crisis. “If you have a long view, it’s a much smaller problem.”

Gallagher said by the year 2030, the state’s pension plans should be funded at a healthy level again, due both to projected economic recovery and the fact that the state essentially refinanced its pension funds in 2010.

The governor hasn’t introduced a specific pension reform plan, but has said he’s interested in changing the unearned benefits of current and future state and public school employees.

House Democrats say such a move would land the state in court over whether it has the ability to fiddle with workers’ contracts.


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Comments: 1

  • PA_Observer img 2013-02-04 13:16

    The legislature has underfunded the pension since the mid 1990's now they want to write a new history to justify default. Adjusted for the CPI to 2012 values, using the Bureau of Labor website calculator, the employer and employee contributions to SERS in 1995 were $578 and 303 Million, respectively. In 1995 dollars, those amounts were $374 and 210 Million.

    In 2011, the employer contribution was 392 Million (175 Million less than 1995 in 2012 dollars), while the employee contribution was 351M ($361 Million in 2012 dollars, or 20% more than in 1995 using 2012 dollars).

    In between those years, the employer contribution dropped to as little as $65 Million (2012 dollars) in 2002. That 2002 employer contribution corresponded to a 17% match of employee contributions, $389.4 Million in 2012 dollars

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