The Pittsburgh Tribune-Review notes that “Pennsylvania shortchanged its state and school pension systems more than any other state in 2009…The state paid only 31 percent of the $2.4 billion needed to keep the funds healthy… ‘It saves money like not paying this month’s credit card bill saves money,’ said actuary Rick Dreyfuss, a senior fellow with the Commonwealth Foundation and frequent critic of state pension policy.”
In order to spend profligately on programs that are outside the core, constitutional function of state government (such as building professional stadiums for sports team owners who can afford to build them themselves), legislators woefully steer money away from the public pension systems and into these unconstitutional programs. This is generation theft because it places a huge financial burden on our children, grandchildren, and great-grandchildren, as they’re the ones who will pay the bills when the buck stops.
Most troubling is that lawmakers have failed to make the common-sense reforms necessary to keep our Commonwealth’s public pension systems afloat. The most important change that needs to be made is to transition these systems from “defined-benefit” (DB) pension plans (golden parachutes) to “defined-contribution” (DC) plans, of which a 401(k) is an example. Consider that recently retired former Senate Minority Leader Bob Mellow, as reported by the press, accrued an annual pension benefit of well over $300,000 a year!
The private sector began making the transition from DB plans to DC plans many years ago. DC pension plans have costs that are stable, predictable, and affordable while providing sufficient nest eggs to their beneficiaries. Here again we see an underlying theme that goes to the very reason CAP was founded, government unions have effectively lobbied and bought off career legislators such that reform never takes shape.
Now, with a fiscal conservatve in the Governor’s mansion and the most fiscally conservative General Assembly in decades, meaningul public pension reform must happen. We simply cannot continue the generational theft. Countvahalrere