State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.

PSERS director says lawmakers should pay more money into pensions

Written by Katie Meyer, Capitol Bureau Chief | Feb 23, 2017 3:27 AM
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Representatives from SERS and PSERS stand to take an oath before their House hearing. (Photo by Katie Meyer/WITF)

(Harrisburg) -- One of the big questions going into state budget negotiations is whether--after years of failed attempts--the legislature will address tens of billions of dollars in unfunded liabilities in its two biggest pension funds.

Those are the State Employee Retirement System and the Public School Employee Retirement System--commonly known as SERS and PSERS.

As budget hearings continue, lawmakers are searching high and low for a way to ease that burden.

Thanks to ill-advised benefit increases in the early 2000s and years of pushed-off payments, the state faces more than $60 billion dollars in pension liabilities over the next few decades.

A 2010 bill made the situation a little better, and this fiscal year, the state met its required debt payment for the first time in 15 years.

But those payments are a strain. Right now, pensions are one of the commonwealth's single biggest expenses, and much of that weight falls to taxpayers and schools.

So the legislature's been trying--fruitlessly--to cut liabilities. The most common suggestion is switching out the current defined benefit pensions for 401k-style retirement plans, but nothing has passed.

At his House hearing, PSERS Executive Director Glenn Grell said reforming the benefit plan wouldn't get at the root of the current problem anyway. Since Act 120 of 2010, he said costs for new pension plans are actually "very low."

Now, the legislature has to address the part of the problem that wasn't fully addressed in 2010: finding the money to pay off the debt.

"Whether it's a dedicated revenue source that would come to us, or a dedicated revenue source that would go to support a bond issue, those are the kinds of things that would really address the funding in a serious way," Grell said.

Many lawmakers still say they intend to push legislation that would change retirement plan options instead.

In a recent Facebook town hall, Governor Tom Wolf--who didn't include any pension overhauls in his latest budget proposal--indicated he'd be willing to sign a GOP-sponsored bill that would create a tiered plan, combining the current defined benefit model with a 401k-style plan.

That bill wouldn't make a dent in the existing debt.

Various versions have already failed to get through the legislature.

Published in News, State House Sound Bites

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