Action needed
People joke that Pennsylvania, between Philadelphia and Pittsburgh, is a lot like Alabama. So maybe that’s why centrally located Harrisburg moves at a much slower pace. Indeed, the folks working there seem to be in no rush at all, regardless of circumstance. And the folks we have in mind are our state lawmakers.
Take the new proposal to do away with the pension plans for state and school employees that are draining taxpayers. The so-called defined benefit plans were phased out of the private sector years ago for one very basic reason: Employers couldn’t sustain them, not without going broke.
In their place, most businesses turned to defined contribution plans, the now very familiar 401(k) plans into which almost anyone working in the private sector has been depositing earnings for years now. This was not an issue for debate. Employers simply gathered workers together and announced the change. Now, go back to work.
Things are never so straightforward in our state Capitol, however, especially when lawmakers’ own compensation and/or that of their benefactors is at stake. And so lawmakers, whose own pensions could be accurately described as outrageously generous, dawdled even after the market crashed and the state’s two pension funds took huge hits.
This happened in the private sector, too. When 401(k) plans lost much of their value, workers had to adjust their retirement plans — perhaps even push back their retirement. State and school employees whose unions contribute millions to lawmakers’ re-election funds did no such readjusting. That’s because state law requires taxpayers to make up the pension funds’ losses, which is in the billions. In fact, the two funds currently are underfunded to the tune of $40 billion.
That’s why your school taxes keep rising and school programs keep shrinking. And this is just the beginning. The projected contributions every school district must yield to make up that $40 billion loss are both eye-popping and frightening.
So, House bills 551 and 552 are welcome legislation, and we commend Bucks County state Rep. Scott Petri for his leading role in their introduction. Just one very big problem. The legislation eliminates the defined benefit plan only for new employees. While that will help by not growing the problem, it does not alleviate the huge burden now weighing on taxpayers.
It’s why lawmakers need to do more. And a lot more than Act 120 did two years ago. That measure, which lawmakers took bows for, raised workers’ contributions and rolled back benefits that were too generous to begin with. It also made other minor changes that had the effect of elongating the payback period; in essence, turning a 15-year mortgage into a 30-year mortgage. Call it kicking the can down the road.
That wasn’t good enough then, and Petri’s bills aren’t good enough now — though they’re a start. Even he admits that more needs to be done. “Freeze current agreements.” That’s what Petri, an attorney, said legislators should do. “Why can’t we say, ‘We’re ending that plan and going to a new plan?’ The numbers just don’t add up any more.”
The Pennsylvania Institute of Certified Public Accountants couldn’t agree more. “The simple fact is that pension systems for school teachers, public employees and state lawmakers are not sustainable in their current forms,” the accountants stated in a recent report.
What’s to debate? The numbers, as Petri said, “don’t add up.”
What to do? Challenge the court rulings — now nearly 30 years old — that require taxpayers to keep those outdated and draining pension funds solvent. It’s the crutch lawmakers have used to keep intact their own benefits as well as those of their public employee union contributors.
At least one lawmaker wants to take that step. State Rep. Todd Stephens, a former Montgomery County prosecutor, said of the “fairly old” precedents: “Maybe there’s an opportunity to revisit them.”
More than opportunity, there’s reason. As Stephens himself said, “This system is going to bankrupt our commonwealth for future generations.” Stephens is not overstating the situation. The pension crisis is real. Lawmakers need to pick up the pace — before it’s too late!
Bucks County Courier Times