Pa. needs pension reform

Posted: June 10, 2013

By Jennifer Stefano

Most Pennsylvania families wouldn't dream of ignoring their financial obligations and spending money they don't have, passing on their bills to others. So why do the representatives of those families think they can get away with that type of behavior?

In 2001, the General Assembly approved enhanced retirement benefits for themselves and state workers, expecting taxpayers to pick up the tab at the expense of their own retirements and households.

Making the situation worse, in the years since, the state has not been contributing its fair share to the pension funds. Lawmakers want the benefits of their votes, but won't shoulder the burdens.

Only government can get away with such breathtaking fiscal hubris. The rest of us wouldn't dream of acting so recklessly.

This behavior is irresponsible and, frankly, immoral. Yes, it is immoral to promise things you know can never be delivered and will bankrupt future generations, those who are unlikely to obtain benefits anywhere near what they are expected to pick up for others.

The result? The state is left with $47 billion in unfunded pension liabilities for its two retirement funds, the Public School Employees' Retirement System (PSERS) and the State Employees' Retirement System (SERS).

Let me translate "unfunded pension liabilities": politicians gave lavish benefits to themselves and other state workers and refused to pay the bill, and, if nothing changes, that money will come out of the pockets of working men and women in the forms of increased school and other taxes. Indeed, at least a third of the commonwealth's school districts are seeking property-tax increases as a result of pension costs.

Fortunately, Gov. Corbett and other elected officials have introduced legislation to steer our state away from this approaching train wreck. The bill isn't perfect, but it would require state government to practice the fiscal responsibility that millions of Pennsylvania households do every day.

One of the biggest reforms in the governor's plan would be to switch state workers from a defined-benefit plan to a defined-contribution model - similar to what most working people have in the private sector. The state Office of the Budget estimates that this change would eliminate the state's unfunded pension liabilities by 2041, relieving our children of that burden. Michigan enacted a similar plan, saving its taxpayers billions of dollars.

Special-interest groups are trying to derail the reforms. But it's also in their interest that the changes proceed. The governor's plan would not change the benefits of current retirees and would only moderately adjust the payout to current state employees. Besides, without reform, the state may not have the resources to fund anyone's retirement in a few years.

For the sake of our state and our children, we must insist that our elected officials practice the same fiscal responsibility that our families do every day.


Jennifer Stefano is the state director of Americans for Prosperity - Pennsylvania. She hosts "The Stefano Show" on WNTP-AM (990) on Saturday nights at 9. E-mail her at InfoPA@afphq.org.

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