State House Sound Bites

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

Trading barbs, legal theories on pension overhaul

Written by Mary Wilson, Capitol Bureau Chief | Mar 27, 2013 9:38 PM

In his essay on individualism, Ralph Waldo Emerson says there comes a time in every young man's life when he realizes his own boundless potential -- that "The power which resides in him is new in nature."

It looks like we're at that point in the pension overhaul debate.

One piece of the proposal offered by Gov. Corbett would reduce future benefits for current state and school employees. Unions have promised a court challenge, saying such pension benefit tweaking has been deemed unconstitutional and overturned by the state Supreme Court.

But Corbett's Chief Counsel James Schultz said Wednesday the court hasn't seen anything like the governor's plan before, because the proposals would affect only unearned benefits, and the courts have ruled only on issues of affecting employees' already-earned benefits.

"So when you hear folks out there saying, 'Well these, this issue has been determined by the court,' - this is a brand new analysis for the... Pennsylvania Supreme Court," said Schultz.

The state's largest teachers union takes issue with that. In a written statement, the Pennsylvania State Education Association said the two cases the state's high court ruled on in 1984 did involve changes to employees' future contribution rates to their pensions, and those changes were struck down.

Stephen Herzenberg, an economist with the left-leaning Keystone Research Center, said the administration's prediction of court-tested triumph is based on a "novel legal theory."

"The court cases in the 1980s were after the pension funds took a hit and the financial market downturns of the early 1980s - so they weren't very different situations then there are now and the courts were unambiguous," he said.

AFSCME Council 13 executive director David Fillman scoffed at the administration's legal argument as "purely speculation."

"Does that mean they can take everybody's pension away tomorrow because it's tomorrow? That is totally bizarre," said Fillman, whose union division represents more than 65,000 employees.

Corbett's chief counsel added, though, that even if the state Supreme Court were to find that the administration's proposed overhaul (if it's passed and signed into law) amounted to a broken contract, the breach could be allowed if the court agreed that it accomplishes "an important public purpose."

Translation: if it helps us avoid spiking pension payments, it stands - or so posits the administration.

The governor's budget secretary, Charles Zogby, added pressure to the Legislature to approve the proposed pension changes with a reminder that if they fail, the governor's proposed budget will need revisions.

"We have a budget that we need to enact by June 30th and that budget is predicated in part on $175 million in savings," said Zogby. "So I think we have an immediate challenge - that if we go beyond June 30 with pension reform, we have a budget that is out of balance."

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