Pension 'reform' provides false 'savings'
07/30/2014 02:41PM, Published by Lev, Categories: Opinion
By State Rep. Mike Sturla
I've been following with interest recent pronouncements from Gov. Tom Corbett claiming billions of dollars in "savings" if the Corbett/Tobash pension "reform," based on questionable 30-year assumptions, becomes law. When pressed by reporters if there are any savings in the near term, the governor replied, "No, but this is the first step." If proposing that Pennsylvania enact what would be one of the worst public pension systems in the nation is only the first step, what does he have in mind for the second step; abolishing pensions all together?
The Corbett/Tobash plan does not generate any short-term savings, nor, according to actuaries who analyzed the proposal, does it pay down the unfunded $50 billion pension liability debt any faster than current law requires. So why all the hubbub now?
Make no mistake about it: Gov. Corbett knew that higher pension payments were coming due in 2014 when he took office in 2011. It was spelled out in the Act 120 pension reforms that were enacted by the legislature in 2010, but instead of budgeting for those obligations, he provided $2 billion in corporate tax breaks and waited until now to claim a pension "crisis" in order to slash worker benefits as a "solution."
The Corbett/Tobash plan finds its supposed "savings" by cutting retirement benefits for teachers and other workers by as much as 40 percent, making the benefits among the lowest in the nation. Currently, the average public school employee's pension is $24,122 a year, while the average retired state employee's pension is $25,839 annually. Do we really want future state pensioners to qualify for welfare benefits?
Let's also not forget that state and school employees have been making their required pension contributions all along. It was the state that didn't fulfill its payment obligations. So what's to keep that from happening with the Corbett/Tobash plan? Nothing.
In fact, an overlooked provision in the Corbett/Tobash proposal known as "legislative reservation of rights," essentially would remove any hurdles to slashing pensions again in the future. If a future governor (perhaps one who makes a no new taxes pledge) decides that the pension obligations are too onerous on a future state budget, then the legislature could underfund the contribution to the pension plan like they have for years under the current plan.
Finally, the governor called out the legislature for being beholden to special interests regarding pension "reform." These "special interests" are the people who teach our kids and thousands of others who work hard every day to make a civilized state run properly. I'll take those "special interests" over the governor's favored friends – the out-of-state gas drillers who are making billions of dollars from our state's precious natural resource without being taxed at a similar rate as in every other state where natural-gas drilling is taking place.
Gov. Corbett should be focusing on restoring his education cuts, growing jobs, protecting the environment and improving the lives of Pennsylvania's working families.
That would allow the state and school districts to meet their pension obligations under Act 120 of 2010 and move everyone in Pennsylvania forward instead of jeopardizing the retirement security of tens of thousands of Pennsylvanians.
This election-year ploy should be viewed for what it is: an attempted distraction from the abysmal tenure of Gov. Tom Corbett.
(Rep. Mike Sturla of Lancaster County is chairman of the House Democratic Policy Committee.)