Bipartisan panel backs hybrid state pension plan

Posted: May 30, 2014

HARRISBURG - With billions at stake, the standoff over how to resolve Pennsylvania's pension crisis has loomed large as budget negotiations begin this spring.

A decision Thursday by the Public Employee Retirement Commission may signal a break.

The bipartisan panel backed legislation to create a hybrid pension system for state and school employees, and Gov. Corbett said he would support it.

"The governor has called on the commonwealth to address pension issues, the spiraling year-over-year costs to the commonwealth - and school district costs - as well as addressing the risk to the taxpayers," Corbett spokesman Jay Pagni said. "This plan encompasses both of those issues."

The legislation, sponsored by Rep. Mike Tobash (R., Berks), would reduce the nearly $50 billion state public pension debt by combining a traditional publicly financed pension with the 401(k)-style plan now favored by private companies.

The proposal would affect only new employees starting next year.

Steve Miskin, spokesman for House Republican leaders, said the Tobash plan was the one they were "trying to forge consensus around."

He said leaders hoped to have the plan approved before the July 1 budget deadline.

But the ranking Democrat on the House Appropriations Committee issued a harsh critique of the plan Wednesday, saying it would not produce any short-term saving, and would harm retirees by eliminating a modest $100-per-month health-care supplement for school retirees.

"Gov. Corbett and House Republicans are looking to further reduce worker benefits under the guise of pension 'reform,' a diversionary tactic to distract the public from the budget crisis," said Rep. Joe Markosek (D., Allegheny).

In his February budget address, Corbett proposed temporarily reducing employer contributions to save $300 million in this year's state budget.

Actuaries estimate the changes called for in Tobash's legislation would save roughly $11 billion over 30 years while shifting the risk from taxpayers to employees.


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