Pension issue, budget in home stretch Published June 2013 Voice The final weeks of June are the home stretch for the state budget process, meaning it’s important for PSEA members to keep up the volume through emails, letters, phone calls, and personal contacts with their legislative representatives. Pensions, public school funding, and closing corporate tax breaks to provide revenue are all issues in play that affect the professional and personal lives of educators. As this issue of Voice went to press, here is what the issues looked like: Pensions The governor’s proposals to change benefits for current members of the Public School Employees’ Retirement System, and put future members into an inferior defined contribution plan have been formally introduced as legislation by state Sen. Mike Brubaker, R-Lancaster County, and Rep. Chris Ross, R-Chester County. In addition to sharply reducing retirement security for future employees and costing taxpayers more money to administer, the changes would cost the average PSERS’ member – 11 years of service and an annual salary of $50,000 – $16,166 annually in retirement based on an assumed working career of 35 years. PSEA President Michael J. Crossey reiterated the Association contends any change in benefits to current employees, which the governor wants to do by changing the pension formula to lower retirement payouts, represents a violation of the contract clause of the state constitution. Past court cases involving public employee unions have upheld that legal principle. Corbett and his budget secretary, Charles Zogby, contend that future benefits of current employees are legal as long as benefits earned to date are honored. “It’s an impairment of contract and it’s illegal,’’ Crossey said. “We’ll be in court in the blink of an eye.’’ The good news is there seems to be some recognition of the legal perils on the part of key legislative leaders of the governor’s own party, including Senate Majority Leader Dominic Pileggi, R-Delaware. Another positive development was the House Republicans unveiling a budget proposal that, unlike the governor’s, did not anticipate the governor’s plan passing. The bad news is that Pileggi has indicated he is open to at least switching new employees to a defined contribution plan. But if Pileggi and lawmakers look at the facts, they’ll find not only do defined contribution plans undermine retirement security, as has been shown in the private sector, but that states switching to them from defined benefit plans find they are more costly to administer. West Virginia and Nebraska switched to defined benefits plans after trying defined contribution plans. Alaska switched to a defined contribution plan and discovered what PSEA and others have contended will happen here – employer contributions skyrocketed for employees still in the defined benefit plan. State Treasurer Rob McCord has noted that the combined $41 billion in unfunded liability to PSERS and the State Employees’ Retirement System still has to be paid regardless of whether changes are made to current and future employees’ benefits. The governor’s plan, he said, would make employer contributions lower in the short term, but actually add $5 billion to the debt by 2019, which McCord notes would be just when Corbett is leaving office should he win a second term next year. The irony here is that current PSERS’ members would be punished under the governor’s plan even though they were contributing an average of 7.5 percent of their salaries to their pensions while the state gave itself a “pension holiday’’ and made no contributions for much of the first decade of the 2000s. The pension holiday is one of the main reasons for the unfunded liability. Yet, PSEA members and other public employees made compromises under the Pension Reform Law of 2010 that will provide $33 billion in future cost savings for PSERS and SERS over the next 30 years. Funding When Corbett took office two years ago, there was no public education funding crisis. The governor made sure there was one by slashing nearly $1 billion in basic education funding. Nearly 20,000 educators have lost their jobs, class sizes have ballooned, and arts and foreign language classes, and after-school programs have either been sharply reduced or eliminated. The governor is proposing to add $90 million in education funding in his 2013-14 budget, but is linking that to his liquor privatization proposal passing and using the proceeds from that. “Now it’s clear what this is all about,’’ said PSEA Treasurer Dolores M. McCracken. “Manufacture a crisis and then use it to advance your agenda.’’ House Republicans proposed a budget in late May that called for $10 million more in public education funding than Corbett, or $100 million. But much more is needed to undo the damage of the past two budget years. The Pennsylvania School Funding Campaign (paschoolfunding.org) has called upon the governor to restore the nearly $1 billion in cuts over the next three budget years, starting with a $270 million increase in 2013-14. The campaign, like many public education interests, notes the revenue is readily available if the governor would stop giving tax breaks to major corporations, and close existing tax loopholes (see previous story starting on page 10). “Billions of dollars are literally available,’’ McCracken said. “But the governor is more interested in pleasing corporate donors and then he is the education of Pennsylvania’s children, and the jobs of middle-class families.’’
Posted on: Sat, 14 Sep 2013 16:18:54 +0000
Trending Topics
Recently Viewed Topics
© 2015