Pennsylvania Lawmaker Tackles Public Pension Debt

Published April 22, 2015

A Pennsylvania state senator is trying to reform his state’s municipal and state public pension plans, to help protect taxpayers from continually increasing public pension debt.

Sen. Jake Corman (R-Bellefonte) says reforming the state’s public pension plans will not be easy, but he plans on unveiling a concrete plan soon.

“Pension reform is a complicated issue and our bill is currently being drafted. We expect to introduce a plan in the coming weeks for consideration by the Senate,” he said. “I cannot get into specifics at this time, but the legislation will provide tangible, structural reforms to the pension system for current and future employees.”

‘Serious Risk’

Failing to address public pension debt is not an acceptable option, Corman says.

“Without modification, the viability of the state pension system will be in question. The state will need to pay an additional $1 billion over last year to fund pension obligations,” he said. “If we fail to act, we are putting the state’s finances at serious risk.”

Corman says he wants to shift new public employees to a defined-contribution program, similar to pension plans enjoyed by many private-sector employees.

“The Senate does not want to reduce benefits; rather we want to move new employees into a 401(k)-like system,” he said. “Our plan will partner taxpayers and employees in order to strive toward not only retirement security but employment security.”

The state’s current fiscal course is unsustainable, Corman says.

“Without change, we will have to find money in state government to fund the pension system because we cannot ask all taxpayers to pay more to support a pension system for eight percent of the state’s workforce,” he said.

First Steps

Allegheny Institute for Public Policy Senior Policy Analyst Eric Montari says public pension reform is a massive issue in the state.

“Most of the state budget gets eaten up by pension obligations, and with the public school plan, because the employer contributions come from the state and the 500 school districts in the state, there will be school property tax increases to match the employer contribution levels,” he said.

Montari says Corman’s plan is a good step towards fixing the problem.

“It is a good step to ‘stop the bleeding,’ but it does not do much to attack the built up benefits,” he said. “Whether the Senate plan will go forward with trying to alter the benefits not yet earned by current employees has yet to be seen, but there would certainly be a big pushback and almost certainly a court case to determine the legality.”

Matt Hurley ([email protected]) writes from Cincinnati, Ohio.

Internet Info:

Thomas J. Healey, et al., Harvard University, “Underfunded Public Pensions in the United States: The Size of the Problem, the Obstacles to Reform and the Path Forward,”