Bad (Pension) Legislation Never Dies - Citizens Alliance of Pennsylvania

Bad (Pension) Legislation Never Dies

Bad legislation never dies in Harrisburg, and it doesn’t even slowly fade away.

So the Tobash plan for changing the design of pensions for certain classes of new employees is getting another push. The Tobash plan, HB 1499, is sponsored by Rep. Mike Tobash (R-Schuylkill), but it was originally the idea of folks at the Public Employees Retirement Commission (PERC).  It is their duty with respect to the state pensions systems “to assure their actuarial viability through a review of any proposed legislative changes in those plans.”

When reviewing HB 900 this past June, which really does “stop the bleeding” and would eliminate the unfunded liabilities of SERS and PSERS over 20 years, PERC decided that it was more important for legislators to consider other budget priorities.  In other words, the institution, whose sole purpose is to assure the soundness of public employee pensions, instructed legislators in PERC’s review of HB 900 to continue their dreadful and harmful 12 year policy of diverting funds from pensions to other purposes.

Perhaps it’s just a coincidence that four of the nine members of PERC’s board are legislators, and one of them is Rep. Tobash. The other five members are gubernatorial appointees.  What incentive do they have to assure that pensions will be adequately funded when the last three governors, including the current one, wanted no such thing?

The Tobash plan was introduced last year as an amendment to HB 1353. At that time, it set up a “stacked” retirement benefit system. The first $50,000 in state employee pay is eligible for a traditional pension; beyond that there is a 401(k) style plan. It is worth noting that the average state employee salary was $52,655 for 2014. In other words, the Tobash plan as introduced last year would have had impacted very few future employees. According to actuarial analysis done last year, 98.8% of the “savings” projected under the Tobash plan is 15 years or farther into the future, which is a pretty big problem since SERS and PSERS are on course to be bankrupt in 15 years.

While some of these same criticisms certainly apply to SB1, the Senate’s pension reform plan, Tobash’s plan goes completely in the wrong direction. Rather than addressing the unfunded liabilities and pension costs of current employees, the Tobash plan would merely provide lawmakers the ability to say they passed pension reform without actually addressing anything.

Politicians are very sensitive to current and near-term costs because the next election is less than 2 to 4 years away.  But the massive harm heading toward the commonwealth in less than a generation—well, that’s someone else’s problem apparently.

And so, another Rube Goldberg device will be trotted out, debated, lobbied, perhaps even voted on (and if passed, vetoed) and all the while the unfunded liability which impends doom for the future of the commonwealth remains unaddressed.  It’s simply the politicians’ usual play: bait and switch—promise changes later and call that savings.  Then use the phony savings to justify continuing to underfund the pensions and divert monies to other places in the budget.

The priority is always less pension funding today, and when tomorrow comes, the priority will be less funding then too.  It might get politicians re-elected, but it’s not exactly anyone’s definition of statesmanship.