The Pennsylvania General Assembly failed to pass a pension reform bill Wednesday that would have changed the retirement plans for future state government and public school employees. Beginning in 2018, the bill would have allowed new employees to choose from three new benefit plans, a 401(k) plan or one of two hybrid plans that are a combination of a defined-benefit and contribution plan. The legislation would not have affected current or retired employees who are part of the State Employees Retirement System and Pennsylvania School Employees Retirement System. The new plan structure was expected to lower pension payments by the state and school districts by some $2.6 billion over three decades. However, the new plans did not provide any short-term savings, nor did they do anything to lower the state’s $60 billion pension debt.
After four years of being tossed about in the legislative mosh pit we call the General Assembly, a viable pension reform bill had survived, or at least it looked like it had.
But alas, the floor of the Legislature has shown itself, once again, to be a place where good ideas go to die.
Yes, you can place the pennies on the eyelids of yet another promising piece of pension reform legislation.
R.I. P. Again.
The bill had zero support among Democrats and labor unions. Even some Republicans opposed it.
Proponents of the legislation were crestfallen after it fell three votes short of the 102 necessary for passage.
“Look, we gave it our best shot on pensions,” said House Majority Leader Dave Reed, R-Indiana, after the vote. “We came up short.”
At a news conference, Senate Majority Leader Jake Corman, R-Centre, criticized Democratic Gov. Tom Wolf for not gathering votes from his own party.
“This governor, who said he’s for this bill, provided zero votes. To me that's unprecedented, if he truly wanted it,” Corman said.
To the Republican-controlled Legislature that crafted and championed the bill — nice try. To all others, who were unable to put partisan allegiances aside in favor of common sense, or who found enough shortcomings in the bill to kill it, you’ve missed yet another opportunity to help release the full nelson in which public pensions have Pennsylvania taxpayers.
Yes, we realize the legislation was imperfect, but it was something. And after a prolonged period of nothing, something would have been a welcome change.
Pension reform is long overdue, and this bill would have only been a start, but it also represented a step in the right direction.
Critics, including Democratic Rep. Mike Sturla from Lancaster County, said the bill didn’t go far enough, that the savings were exaggerated and the cuts in benefits were understated. Opponents also believe the cuts for future state and school employees would have a chilling effect on recruitment and hiring, among other criticisms. Both opponents and supporters of the bill were armed with studies that supported their positions.
But we don’t need another study to know that pension debt is a millstone around the necks of Pennsylvania taxpayers. In Lancaster County, 15 of 16 school districts raised property taxes this year; pension obligations have been considered one of the biggest drivers for tax hikes across the state.
After an earlier version of the pension reform bill passed the House in the summer, Republican members said in a statement, “As savings begin to grow over time, taxpayers will have better protection against the strain of property taxes.”
The state will pay some $200 billion in pension benefits over the next 32 years. By next year, the unfunded liability for state and public school employee pensions is expected to rise to $64 billion. This is simply unsustainable. And while this piece of reform was rather modest and didn’t make a dent in the current liability, at least it would have plugged the leak.
Pension reform is officially dead for this legislative session. Republicans have pledged to make it a priority, again, next year.
Lawmakers had a chance to do something truly historic by passing this bill, flawed though it may have been. But the wrong side of history is too often where Pennsylvania finds itself.
And here we are. Again.