Time for action
The pension systems for Pennsylvania’s state employees finds itself woefully underfunded.
The growing $41 billion shortfall was born of benefit-friendly adjustments made in Gov. Tom Ridge’s tenure during sunnier economic times. It was then followed by the decade-long economic downturn. Now the guaranteed retirement for current retirees and state workers planning to retire is only 67.8 percent funded.
Addressing this imbalance has fallen to Gov. Tom Corbett, who was elected to be a budget hawk. Since taking office two years ago, Corbett has given the state’s books their closest shave in years and hasn’t raised taxes to do it.
Everyone has known about this dire pension crisis facing the state for years. Now Corbett says he’s ready to do something about it.
We say have at it Gov. Corbett.
Ultimately, any and all state employees’ pension shortfall costs are the responsibility of commonwealth taxpayers, who’ve had to accept sometimes drastic cuts to state services. They have little appetite for more.
If services aren’t cut to absorb the unfunded balance of skyrocketing pension costs, then taxes will have to be raised. That’s another alternative beleaguered taxpayers would find decidedly distasteful.
After a decade of their own uncomfortable belt-tightening and other individual sacrifices, taxpayers deserve better solutions from their state government.
Corbett sounds like he’s got some.
In a meeting with The Patriot-News editorial board Tuesday, state Budget Secretary Charles Zogby said the governor’s pension reform plan will be rolled out before or with his annual budget address next month.
The plan will not affect benefits already accrued by current retirees or employees still working for the state, Zogby said. But adjustments to current workers’ future benefits appear to be central to Corbett’s pension reform plan.
The governor expects pushback from state employee unions, the legislature which also benefited from the Ridge pension hikes, and — if other states that have tackled similar shortfalls are any indication — a court challenge.
But facing up to fixing the state’s listing pension ship is vital for the health of the state and Pennsylvania taxpayers, many of whom are struggling to keep their own books in order and weren’t well-served with pension adjustments made in the previous gubernatorial administrations.
More than a decade ago, with the financial markets booming, the pension fund was generating benefits in excess of what it promised to its members. The surplus enticed state leaders to expand benefits while reducing the commonwealth’s actual contribution to the pension fund.
Pension eligibility went from 10 years to 5 — allowing episodic political appointees who serve through a governor’s eight-year term limit to be vested.
Another calculation multiplying benefits went from 2 to 2.5 percent.
And the employer contribution rate for the state was capped.
These adjustments were born out of behind-the-scenes political maneuvering and seemed doable with the economy soaring. But then the market crashed, and the financial market contributions that once accounted for the bulk of pension additions plummeted, leaving taxpayers holding the tab.
Zogby says state employee unions have acknowledged the problem but have sought to hold what they have rather than proactively engage in protecting the future solvency of the pension fund.
Corbett expects their cries of foul play will be loud.
But the governor knows the system needs to be fixed. Pennsylvania taxpayers should be on his side.
Harrisburg Patriot-News