Pa. Gov Corbett Prioritizes Pension Reform

Monday, 21 May 2012 01:45 PM

By Sandy Fitzgerald

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Republican Gov. Tom Corbett has elevated pension reform for Pennsylvania state employees to a priority status on his political agenda, saying the state’s upcoming budget battle will be “driven by how much we have to contribute to pensions.”

The pensions last year were under funded by at least $37 billion, according to the Pittsburgh Post-Gazette. Even with a revised payment plan approved in 2010, the state’s obligations will continue to grow, and Corbett says the state’s economy isn’t growing fast enough to cover the increase.

“Does anybody here see the economy growing fast enough just to cover the pension increase?” Corbett asked during a recent speech. “So we have a problem. We have an iceberg right in front of us.”

According to the Post-Gazette, the state owes more to its pension obligations than it spends on the annual operating budget, a situation that has prompted a host of reform bills in the legislature.

They include a proposal to enroll all new state employees in 401(k) style plan. Another proposal would create a cash balance plan that pays retiring employees an annuity equal to their own and the state’s share of contributions.

David Fillman, executive director of the American Federation of State, County and Municipal Employees in Pennsylvania, told the Post-Gazette it’s unfair that workers who paid into the system now can’t be sure of what’s going to happen. He said the state must uphold its obligations.

“We knew this 10 years ago . . . was coming,” he said. “When your bills come due and you don't want to talk about raising revenue, you’ve got a real problem on your hands.”

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