Big Labor hates Pennsylvania Gov. Corbett’s pension reform plan

February 6, 2013

Trevor TenBrink Trevor TenBrink

Trevor was website administrator for EAG from December 2012 to March 2014.
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By Victor Skinner
EAGnews.org

HARRISBURG, Pa. – A pension reform package proposed by Gov. Tom Corbett is drawing fire from the state’s Big Labor leaders because it would reduce employee retirement benefits to help ease the financial burden on public employers, including public schools.

corbettThe governor wants to lower the multiplier used to calculate employee pensions from 2.5 to 2.0 to keep the Public School Employees’ Retirement System and State Employees’ Retirement System viable. The combined debt of the two systems is $41 billion, the Pittsburgh Post-Gazette reports.

“The debt was created by several factors, including an increase in benefits that was given by the Legislature in 2001 when the two funds were flush with money and funded at more than 100 percent,” the newspaper reports. “That increase was followed by years of poor return on investments and contributions from the state and employers that were well below what was necessary.”

State lawmakers approved legislation in 2010, known as Act 120, that would fix the debt by increasing contributions required from the state and public schools.

For 2013-14, the employer contribution rate is scheduled to increase 4.5 percent to a whopping 16.75 percent. Corbett wants to dramatically reduce the size of the increase to 2.25 percent, then add half of a percent per year until the annual increase reaches 4.5 percent.

Corbett’s plan would save $1 billion for schools over the next five years. Without the savings, Corbett told the Post-Gazette, students and taxpayers will suffer as schools struggle to keep pace with dramatically increased pension payments.

“That is money that can be used for programs and services,” Jay Pagni, a spokesman for the governor, told the Post-Gazette.

Of course union officials are crying foul and have threatened to file a lawsuit against the state if the plan is approved. They claim employees have already made their contributions while the state and employers haven’t. They argue that Corbett’s plan punishes employees.

“We will file suit without blinking an eye,” Pennsylvania State Education Association spokesman Mike Crossey said.

The unions exist to please their members, and their members obviously hate the idea of reduced benefits. But if the burden for fixing the pension system rests completely with the state and schools, then government services and student services will suffer.

This is a problem that everyone – certainly including the greedy unions – helped to create. Some would argue that it’s only fair that everyone contribute toward a painful but necessary solution. That might be better than asking K-12 students to settle for less of an education than they deserve.

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