The result: The state's two public pension plans, for state employees and public school workers, have an unfunded liability of $41 billion. What's more, pension cost increases in the next few years will skyrocket, threatening to gobble most of any additional revenue coming into state coffers and leading to steep cuts and even steeper property tax increases.
"Absent meaningful structural pension reform, the state's General Fund budget is on a very predictable path that will force a choice between either fully funding pension obligations or making cuts to the core functions of government," Budget Secretary Charles B. Zogby said in a statement. "It is imperative that Pennsylvania find a workable solution."
In the current budget, the state's pension contributions are projected to hit $1.6 billion. In the coming fiscal year, that number will rise to just over $2.2 billion, a 45 percent increase. It will more than double to $5.1 billion by 2019-20 fiscal year, according to the report.
Corbett has said he will unveil his pension reform plan when he presents his budget in February.
Although the governor has given few specifics, his administration has indicated it was toying with a plan that would enroll all new state workers in 401(k)-style plans that would require larger employee contributions.
The report notes that Corbett pledged, when running for governor, not to raise taxes, so tax increases should be "off the table."
The report also indicates that former public and school district employees will not be affected by any of the changes, and that accrued retirement benefits of current employees should not be touched.
The report said Pennsylvania will consider other options, such as increasing the retirement age by two to three years; changing how the basic pension formula is calculated; eliminating overtime pay in pension calculations; and capping the retirement benefit.
The full report is available for download at www.budget.state.pa.us
Contact Angela Couloumbis at 717-787-5934 or acouloumbis@phillynews.com, or follow on Twitter @AngelasInk.
