Three Pennsylvania pension reform bills made their way out of the House State Government Committee and will now be considered by the full chamber, which could be called for debate when lawmakers return to Harrisburg later this month.
The proposals came out of recommendations made by a public pension review commission that was formed through legislation passed two years ago. The commission identified actuarial savings of about $10 billion over a 30-year span for both the State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS).
Currently, $65 billion of the state’s $75 billion debt shortfall is due to unfunded future retirement benefits, including health insurance for public employees after they retire.
“When you break it down, each taxpayer is on the hook for $17,100,” said state Rep. Garth Everett, R-Lycoming, the chairman of the House State Government Committee. "That’s unacceptable and it shows why these bills are necessary. Now more than ever it is time for pension reform.”
House Bill 1960 calls for the consolidation of the investment offices between the two retirement systems.
State Rep. Mike Tobash, the bill’s sponsor and the pension review commission’s chairman, told the committee last week that the consolidation offers several benefits, including an increased return to both systems.
“It has been noted that Pennsylvania could certainly improve its performance within our two pension systems, and improved performance means less taxpayer dollars going in to fund the commitments we made to retirees,” he told his House colleagues in the Oct. 29 hearing.
Tobash’s bill passed the committee with an 18-7 vote, with three of the Democrats joining Republicans in supporting the measure.
State Rep. Kevin Boyle, D-Philadelphia, the committee’s minority chairman, wasn’t one of the three, but he said he could ultimately support it on the House floor. His concern stemmed from wanting reaction from the retirement systems on the bill.
“I think we should have more time to flush this legislation out,” he said.
House Bill 1982, which would give any SERS employer the option to make a lump-sum payment against accrued liabilities, passed by a 21-4 vote, with four Republicans opting against the measure.
State Rep. Jerry Knowles, R-Tamaqua, one of the four GOP opponents, said that prefunding sounds good, but it’s state agencies and employers, such as Penn State University, that will be making the payments.
And those employers rely on the Legislature for their funding.
“Where the hell are they going to get the money from?” he asked, in particular about Penn State.
Even a supporter of the bill, state Rep. Joe Ciresi, D-Royersford, said he had some concerns about what would happen when those agencies face a future budget crunch.
It has the possibility to create a “slippery slope” situation, he added.
“It’s going to come back to fall on us again, and if we don’t bail them out, how is it going to look?” Ciresi said.
The bill sponsored by state Rep. Kerry Benninghoff, R-Bellefonte, would require SERS to approve any request to make a lump-sum payment.
The other bill, House Bill 1996, would require both systems to establish independent boards. That would include an audit committee and an executive committee and would establish term limits for board members.
That bill, sponsored by state Rep. Francis Ryan, R-Palmyra, passed on a 15-10 party-line vote.