GOP bills would change Pennsylvania pensions

HARRISBURG -- Three months after proposing a multipronged plan to limit state pension costs, Gov. Tom Corbett on Tuesday joined a pair of Republican legislators to announce bills in the House and Senate.

But as attention here begins to focus on the tasks ahead before the June 30 budget deadline -- often a de facto due date for other major legislation -- prospects are unclear that there's enough time to make broad changes to the retirement systems for state and public school employees.

In his February budget address, Mr. Corbett laid out a plan designed to address the unfunded liabilities of the statewide defined-benefit plans -- funding gaps now valued at more than $47 billion -- while limiting future risk to the state. Speaking to reporters Tuesday, the governor described a stark choice: Without overhaul, he said, growing pension costs will crowd out funding for education, public safety and other government functions.

"If we do not do this, that freight train is going to run us over, and we will start facing the issues that Illinois and California are already facing," Mr. Corbett said. "So I urge my friends in the Legislature to vote for change."

The governor stood onstage with Sen. Mike Brubaker, R-Lancaster, and Rep. Chris Ross, R-Chester, who announced their introduction of bills mirroring his plan to change how yet-unearned benefits are calculated for current workers -- reducing a multiplier used to calculate benefits, increasing the years for final average salary, limiting pensionable compensation -- while closing off the State Employees' Retirement System and the Public School Employees' Retirement System by diverting new hires into a defined-contribution plan similar to a 401(k). Sen. Pat Browne, R-Lehigh and the Senate Republican point person on pensions, also lent his support.

Offstage, Rep. Glen Grell, R-Cumberland and a leader of a House Republican task force on pensions, said he had declined to sponsor the legislation, in part because the plan includes immediate deferrals in state payments despite promises by unions to challenge the plan in court.

"If we've already taken those savings and the courts end up striking down the other reforms, then we've underfunded the pension again," Mr. Grell said, adding: "I frankly don't like to pass legislation that guarantees going immediately to court."

In the Senate, the idea of enrolling new employees in a 401(k)-type plan has broad support among Republicans, said Erik Arneson, spokesman for Majority Leader Dominic Pileggi. But he, too, pointed to concern that the changes for current workers would not be allowed.

"Our review of the relevant court decisions leaves us extremely skeptical that that would be constitutional." Mr. Arneson said. "If that were passed, at a minimum it would be tied up in court for potentially years."

The Pennsylvania State Education Association, the state's largest teachers union, has pointed to a pair of 1984 decisions by the state Supreme Court that it says safeguard the benefits of any worker already hired.

The Corbett administration has argued it will prevail in court because its proposal protects all retirement benefits already accrued. In a briefing earlier this year, James Schultz, the governor's chief counsel, said that while state courts recognize a contractual right to benefits already earned, no Pennsylvania ruling has addressed changes that apply only to benefits employees have yet to earn. The administration also points to a provision in the bills allowing a court challenge to proceed directly to the Pennsylvania Supreme Court.

Pension overhaul is one of several major policy proposals Mr. Corbett has put forth this session. In addition to his annual state budget proposal, the governor has called for increases in funding for transportation infrastructure and the disbanding of the state system of wine and liquor sales.

Mr. Ross, the House sponsor, acknowledged the difficulty of gaining support for change in public-employee pensions.

"It is nasty. It is difficult. It is hard," he said. "The fact that people haven't rushed to it is not completely surprising."

But he said time remains to pass a bill before the June 30 budget deadline. "And if we're unsuccessful, we need to come back in the fall and go right back at it," he said. "We need to go until we get this fixed."

Source: http://www.post-gazette.com/stories/local/state/gop-bills-would-change-pennsylvania-pensions-686698

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