The PA House just recommitted the pension bill to committee. Any reforms are now probably dead including the ones to reform legislators and the judicial branch passed yesterday by the Senate. If you are interested and have two minutes, here is a little history about how the pension situation has reached this crisis point: For years the state pension systems were overfunded. So, instead of continuing to fund them at a rate that bloated the system and deferred General Fund dollars from other core functions of government, the state contribution became variable. If the funds investments in the stock market did well, the states contributions would shrink. If the funds performance was poor, the state stretched out the smoothing period over which the market loss would be covered by increasing contributions. During this period the employee contribution burden either remained steady or increased. All of the declines in contributions were due to declining state contributions which began to decline under Gov. Casey and continued to drop under Governors Ridge and Schweiker. Those declines were because the investments were doing so well;So well, in fact, that PSERs assets continued to grow despite the fact that by 2001, PSERS had more retired school teachers in the pension system than actual teachers working. But then, the state raised the payout benefits in 2001 and made no provision for additional contributions to fund the additional benefits. So although the employer contributions paid by school districts and the state rose again slightly under Gov. Rendell, the contribution level never recovered to the level it had maintained in previous decades.In 2007 PSERS assets increased to a high of $67.5 billion (top 1% of public pension plans around the nation). in 2009 the Great Recession hit which impacted investment markets worldwide and PSERS assets now stood at $43.2 billion, having decreased by $19.5 billion in one year. The system has never been able to recover because of the market. While the state was paying in at 3%, when the bottom dropped out in 2009 the state couldnt afford the spike to 30%. Im not defending the actions of the state in the past (I wasnt in office then) and folks can continue to place blame, but the bottom line is we have a real problem on our hands that needs addressed in a comprehensive way for future employees as well as the legislature and judicial branch. Best I can do with an explanation. Thanks Geri Gindhart Sarfert for helping condense this information. :) Lou Bucci Jr Ken Stough Billie Jo Crouse Kathleen McCormick Kelly Jones William Brasco Doug Weimer
Posted on: Tue, 01 Jul 2014 18:10:53 +0000
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