Feb 12, 2003 3 min read

The May 2001 legislation that increased pensions by 25 percent for teachers and state workers and 50 percent for state lawmakers stands as a remarkable piece of handiwork. For one thing, there’s apparently no agreement on where the idea came from. Some close to government say it was then-Gov. Ridge’s idea. Others recall that teachers and state workers lobbied for the increase. Still others opine that the higher pensions were tied to a package of educational initiatives that were approved at the same time.

Cynics claim it was a money grab by legislators, pure and simple. Lending credence to that last belief is the way the pension bill was ramrodded through the legislative process. The bill was introduced on a Thursday and passed the following Tuesday. How remarkable is that?

Well, this is basically the same legislature that sat on its hands for months while the medical malpractice insurance problem blossomed into a full-blown crisis. It’s the same legislature that hasn’t been able to do anything about local tax reform. But higher pensions for themselves? Done deal in four hours.

But that isn’t the most remarkable aspect of the pension bill. It turns out that when lawmakers decided in May 2001 that the time was economically right for pension increases, they were looking at actuarial data that were highly suspect. The stock market – where pension funds are stashed -was already in steep decline from record highs at the time the vote on the pension bill was taken.

A few lawmakers – those who voted against the bill – apparently saw what was ahead. They recognized that granting huge pension increases at a time when employee retirement funds were retreating along with the stock market was a recipe for disaster. School districts, which contribute to teacher pensions, were left to make up the funds’ stock market losses.

When the bulls were running on Wall Street, school districts were contributing little if anything to the pension fund. So they did get spoiled. That doesn’t change the fact that the Legislature displayed lousy timing in boosting pensions when it did, either because it accepted bad information without question or because most of the members chose to ignore the signs a few of their colleagues were able to recognize.

School districts were given a break on their pension contributions for this year after enough of them raised a fuss. But they and the taxpayers who support them are looking at significant pension expenditures over the next few years. This at a time when state budget uncertainties abound, and no one knows for sure what Rendell might have in mind to close an expanding state deficit.

To the Legislature, we can only say this: Here’s another fine mess you’ve gotten the taxpayers into.