Posted: Tuesday, February 26, 2013 6:03 pm | Updated: 7:01 pm, Tue Feb 26, 2013.
State and school employees in Pennsylvania stand to lose nearly $12 billion worth of pension benefits over the next 30 years if Gov. Tom Corbett's pension reform plan is approved.The administration released a printed summary of the financial implications of Corbett's proposal late Tuesday afternoon.
The $12 billion in savings would come exclusively from the Republican governor's plan to reduce future benefits for current employees. It's unclear whether there is enough legislative support and, even if it's approved, unions have vowed a court challenge.
The summary says Corbett's plan to move new hires into a 401(k)-style plan would save more than $5 billion through 2043.
But those savings would be partly offset by proposed limits on how fast taxpayers' share of pension costs may grow in the next few years.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
Pennsylvania's state treasurer and a labor-affiliated research group on Tuesday criticized Republican Gov. Tom Corbett's plan to cut costs by diverting newly hired state and school employees into 401(k)-style retirement plans.
Democratic Treasurer Rob McCord and economist Stephen Herzenberg of the Keystone Research Center said the proposal wouldn't save money but would instead cost taxpayers more. It's a key provision in Corbett's overhaul of the state's two largest public pension plans.
An administration spokesman countered that the critics ignored Corbett's companion proposal to reduce future pension benefits for employees in the current, defined-benefit plan to save an estimated $11.5 billion over 30 years.
"Their argument is based on only half the facts," said state budget office spokesman Jay Pagni.
That proposal, however, is fraught with legal and political challenges, ensuring it faces a steep uphill battle in the Legislature and possibly the courts.
In a teleconference with reporters, McCord and Herzenberg said the introduction of the new plan would reduce the return on investments needed to provide benefits for the aging employees enrolled in the current plan as fund managers seek less risky assets.
At the same time, the cost of the state's 4 percent matching contribution for new hires automatically enrolled in the new pension plan will come from existing pension fund assets, further increasing the cost to taxpayers, they said.
"The governor's proposal will dig a deeper pension hole with taxpayers on the hook," Herzenberg said.
McCord, who is considered a potential challenger to Corbett's re-election bid in 2014, voiced concern about the governor's plan to initially reduce the taxpayers' share of pension costs and limit annual increases for several years.
McCord said it would add $5 billion to what is currently a $41 billion unfunded liability in the Public School Employees' Retirement System and the State Employees' Retirement System, which together include more than 800,000 active and retired members.
"It's basically a planned tax hike on anybody who plans on living in Pennsylvania in 2019 and beyond," he said, citing the year Corbett would complete a potential second term.
Corbett's proposal to reduce future benefits of current employees is all but certain to prompt a legal challenge from public employee unions even if it passes the Legislsature. Many Democratic lawmakers oppose it, and it has received a cool reception from the leaders of the Legislature's GOP majority.
On Wednesday, representatives of the two major pension funds are scheduled to appear before legislative committees scrutinizing the governor's state budget plan for the fiscal year starting July 1.
The summary says Corbett's plan to move new hires into a 401(k)-style plan would save more than $5 billion through 2043.
But those savings would be partly offset by proposed limits on how fast taxpayers' share of pension costs may grow in the next few years.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
Pennsylvania's state treasurer and a labor-affiliated research group on Tuesday criticized Republican Gov. Tom Corbett's plan to cut costs by diverting newly hired state and school employees into 401(k)-style retirement plans.
Democratic Treasurer Rob McCord and economist Stephen Herzenberg of the Keystone Research Center said the proposal wouldn't save money but would instead cost taxpayers more. It's a key provision in Corbett's overhaul of the state's two largest public pension plans.
An administration spokesman countered that the critics ignored Corbett's companion proposal to reduce future pension benefits for employees in the current, defined-benefit plan to save an estimated $11.5 billion over 30 years.
"Their argument is based on only half the facts," said state budget office spokesman Jay Pagni.
That proposal, however, is fraught with legal and political challenges, ensuring it faces a steep uphill battle in the Legislature and possibly the courts.
In a teleconference with reporters, McCord and Herzenberg said the introduction of the new plan would reduce the return on investments needed to provide benefits for the aging employees enrolled in the current plan as fund managers seek less risky assets.
At the same time, the cost of the state's 4 percent matching contribution for new hires automatically enrolled in the new pension plan will come from existing pension fund assets, further increasing the cost to taxpayers, they said.
"The governor's proposal will dig a deeper pension hole with taxpayers on the hook," Herzenberg said.
McCord, who is considered a potential challenger to Corbett's re-election bid in 2014, voiced concern about the governor's plan to initially reduce the taxpayers' share of pension costs and limit annual increases for several years.
McCord said it would add $5 billion to what is currently a $41 billion unfunded liability in the Public School Employees' Retirement System and the State Employees' Retirement System, which together include more than 800,000 active and retired members.
"It's basically a planned tax hike on anybody who plans on living in Pennsylvania in 2019 and beyond," he said, citing the year Corbett would complete a potential second term.
Corbett's proposal to reduce future benefits of current employees is all but certain to prompt a legal challenge from public employee unions even if it passes the Legislsature. Many Democratic lawmakers oppose it, and it has received a cool reception from the leaders of the Legislature's GOP majority.
On Wednesday, representatives of the two major pension funds are scheduled to appear before legislative committees scrutinizing the governor's state budget plan for the fiscal year starting July 1.
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Corbett pension details outlined
Peter Jackson, Associated Press
Posted: Wednesday, February 27, 2013, 3:01 AM
HARRISBURG - State and school employees would be forced to forgo nearly $12 billion worth in pension benefits over the next 30 years if Gov. Corbett's pension changes are approved, according to an administration analysis released Tuesday.
The itemized summary marked the first time the administration had publicly disclosed estimates of the savings and costs associated with the plan Corbett unveiled in his Feb. 5 budget address.
The Republican governor's proposal to reduce benefits for current employees is the centerpiece of his initiative. But it faces an uphill fight in the legislature and possibly in the courts.
"We will maintain that doing so would be unconstitutional," Wythe Keever of the Pennsylvania State Education Association, the state's largest teachers union, said Tuesday.
Corbett's plan to put newly hired employees in 401(k)-style plans would save taxpayers more than $2.5 billion through 2043, compared with the cost of enrolling them in the present defined-benefit plan, according to the summary.
But those savings would be more than offset by proposed limits on the growth of taxpayers' share of pension costs in the next few years, which would push more than $3 billion in new costs into later years.
Earlier Tuesday, state Treasurer Rob McCord and a labor-affiliated research group attacked Corbett's proposal. McCord, a Democrat who is considering a run for governor in 2014, and economist Stephen Herzenberg of the Keystone Research Center said in a teleconference with reporters that the plan would not save taxpayers money but instead would cost more.
An administration spokesman countered that the critics ignored potentially huge savings from the proposal to reduce future benefits for current employees. The biggest portion of that savings would come from a reduction in the "multiplier," a percentage applied to an employee's years of service and final average salary to calculate the pension.
"Their argument is based on only half the facts," said state budget office spokesman Jay Pagni.
McCord and Herzenberg said the replacement of the pension plan would reduce the return on investments needed to provide benefits for the aging employees still enrolled in the current plan as fund managers sought less risky assets.
At the same time, the state's 4 percent matching contribution for new hires automatically enrolled in the 401(k)-style plan would come from existing pension fund assets, further increasing the cost to taxpayers, they contended.
"The governor's proposal will dig a deeper pension hole, with taxpayers on the hook," Herzenberg said.
On Wednesday, officials of the two major pension funds are to appear before legislative committees scrutinizing the governor's state budget plan for the fiscal year starting July 1.
Agree or not, it's a bit of a relief to finally see some movement on this issue. It's been the elephant in the corner for far too long.
You know Gov Hellmann, CPA would just stop paying!!
Speaking of elephants in the corner, how was last nite's SB meeting??
Nobody puts Dumbo in a corner!
Nope. Dumbo goes there all on her own.
Look at how other school districts handle the ranting lunatics.
http://www.rawstory.com/rs/2013/03/01/former-tea-party-candidates-sewage-rant-gets-him-booted-from-school-board-meeting/
He'd hit right in with Steve, Marlys, Al, Ron and the other SOC brutes.
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