State House Sound Bites

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

Could a broke actuary doom pension overhaul?

Written by Mary Wilson, Capitol Bureau Chief | Jun 19, 2014 9:08 PM
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As state House Republicans work to find votes for a bill to overhaul public pension benefits, one opponent says there's another problem down the road.

Rep. Glen Grell (R-Cumberland) said several necessary amendments to the proposal be analyzed by the Pennsylvania Employee Retirement Commission (PERC). The agency is legally required to provide actuarial analysis of any legislation's impact on public pensions before the bills can receive a vote.

Problem is, PERC has run out of funding.

Grell has raised the point before, explaining how the cash-strapped agency rules out any other alternative pension proposals (included the one Grell has offered) from getting the necessary analysis.

But he says the money problems might also doom the governor's preferred pension overhaul plan itself, because of some additional tweaks that need to be made but can't get the standard PERC vetting.

"There are amendments -- very legitimate amendments -- that would be ruled out of order, if this bill was brought to the floor today, or next week," Grell said. He said it's still unresolved whether certain categories of state employees would fall under the proposed new retirement plan, like correctional officers, judges, and state police.

"Those are kind of fundamental questions," Grell said. "And who's in and who's out plays a large factor in how much savings there is in this plan or any plan."

Senate GOP spokesman Erik Arneson downplayed the concerns, calling them minor issues. He dismissed the notion that money problems would be the thing to slow down the pension overhaul proposal.

"If we reach agreement," Arneson said, "...PERC's financial status won't stop a bill from getting to the governor."

There are ways to perk up PERC. The legislature's own surplus is likely sizable enough to advance the agency some money. The House and Senate had almost $154 million in their reserves, as of last June, according to an audit released this week.

"It's being discussed," said Grell. "I mean, there's money in the governor's office as well that could be shifted over there, but it hasn't yet."

The House GOP is entering its third week trying to find 102 votes in its 111-member caucus to pass a pension benefits overhaul. Governor Corbett said this week he won't enter into meaningful budget negotiations until lawmakers pass the bill, or something like it.

The measure, unveiled late last month, would largely reduce retirement benefits for future state and school employees. PERC has estimated it could save $11 billion over 30 years. Supporters say the changes would bring public pensions in line with what the state can afford.

But detractors say the plan doesn't address the state's pension debt, which is approaching $50 billion. That unfunded liability is the cause of immediate budget pressures on the state budget and Pennsylvania's school districts, which are obligated to make scheduled payments into the two public pension systems unless the legislature approves postponing or reducing the payments.

The overhaul proposal is being offered by Rep. Mike Tobash (R-Schuylkill) as an amendment to legislation sponsored by Rep. Warren Kampf (R-Chester).

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