The Tribune Democrat, Johnstown, PA

Latest News

November 3, 2013

Pension crisis a cash cow

HARRISBURG — While lawmakers struggle to come up with a plan to deal with skyrocketing pension costs, there is one option that has remained off-limits: Tinkering with benefits for the retirees.

Some of those collecting pension benefits are the very lawmakers who boosted benefits for themselves and other state employees while approving state budgets that underfunded the pension. In 2001, the Legislature passed a law that changed the funding formula for pension benefits, increasing a multiplier used to determine pension benefits and making the law retroactive to the beginning of each employee’s government career.

Then, throughout the following decade, the state repeatedly underfunded its contributions to the pension system while depending on investment earnings to make up the difference.

In some cases, retired lawmakers are now collecting more in annual retirement payments than the $83,801 a year their successors are getting paid for serving in the Legislature.

Merle Phillips, R-Northumberland, was in the state House for 30 years before his 2010 retirement. He is collecting $120,252 a year in pension benefits.  The watchdog group Rock the Capital identified two other lawmakers who were in office for the 2001 benefit boost who get even more in annual pension payments. The top pensioner: Frank Oliver, D-Philadelphia, who collects $286,118 a year.

House Republican caucus spokesman Stephen Miskin said current lawmakers have largely determined that trying to go after the benefits of retirees and existing employees is probably more trouble than it’s worth. Some lawmakers think it’s just wrong to try to undo benefits that were promised employees and retired employees.

Under this view, the 310,000 retirees in the state’s two main public pension systems made their contributions, it was the government that failed to pay its share.

The consensus is that any attempt to tinker with benefits of current employees or retirees would end up in court. The state needs pension relief as soon as possible, so most lawmakers are looking for a solution that can avoid a legal fight, Miskin said.

Without changes to the pension system, “The 2014 state budget and school district budgets will have to spend several hundred million more for pensions than this year,” said state Rep. Brad Roae, R-Crawford.

Gov. Tom Corbett’s plan that included tinkering with benefits for existing employees is out, said state Rep. Fred Keller, R-Union. State House leaders have told rank-and-file lawmakers that some form of pension reform bill should take place in November or December.

That’s key, because it is unlikely that the Legislature will want to tackle anything controversial in 2014, an election year, said Roae

Any pension reform will likely focus on moving new employees into 401k-style plans.

But actuaries hired by the state pension systems have cautioned that shifting new employees could bring costs that undermine any benefit.

“There are no easy answers,” said Rep. Jaret Gibbons, D-Lawrence.

Keller said that critics have exaggerated the costs of moving workers from defined-benefit plans into the type of defined-contribution plans favored by the private sector.

Gibbons said that the state government shouldn’t really be looking to the private sector for guidance. It’s just as likely a private business would have declared bankruptcy to get out of its pension obligations.

That’s not tactic any lawmaker in Harrisburg is eager to endorse.

But, it’s exactly the route civic leaders in Detroit are trying to take.

A trial is underway to determine if the city can declare bankruptcy. The Associated Press reports that as part of its bankruptcy strategy, Detroit is trying to get out from under a $3.5 billion unfunded liability for pensions.

The Corbett Administration has put the price tag for Pennsylvania’s pension crisis at

$47 billion.

Text Only | Photo Reprints
Latest News
  • naacp1 VIDEO | NAACP honors Heritage Leaders

    Bertha Hill of downtown Johnstown was in her late 30s when Martin Luther King Jr. was assassinated. From her birth and throughout her formative years, Jim Crow laws were in effect, barring her and other African-American citizens from becoming equal members of U.S. society.
    She now lives in a drastically different world.

    July 27, 2014 2 Photos

  • WWI mon28 100th anniversary of World War I

    No American veterans are still alive to provide firsthand accounts of the brutality and heroism displayed during World War I.

    July 27, 2014 4 Photos

  • coal1 Exporting pollution: U.S. energy producers sending dirty coal abroad

    As the Obama administration weans the U.S. off dirty fuels blamed for global warming, energy companies have been sending more of America’s unwanted energy leftovers to other parts of the world where they could create even more pollution.

    July 27, 2014 3 Photos

  • Rising costs for pensions keep schools struggling

    Gov. Tom Corbett is ratcheting up pressure on the Legislature to reform the state’s pension system by focusing on how often school districts use tax increases to offset costs.

    July 27, 2014

  • camp cadet Recruits put through paces at Camp Cadet

    A row of young teens stood tall and attentive Sunday as their instructor paced past, barking out marching orders.

    July 27, 2014 2 Photos

  • Luksik, Peg Independent hopefuls may widen gubernatorial field

    Just when Pennsylvania voters were getting used to the idea of a gubernatorial election showdown between Republican incumbent Tom Corbett and Democratic challenger Tom Wolf, other hopefuls may soon be joining the fray. Johnstown resident Peg Luksik, who twice ran for governor as the Constitutional Party nominee, knows what it's like.

    July 27, 2014 1 Photo

  • Storm sparks reports of lightning strikes

    A fast-moving rainstorm generated reports of lightning strikes throughout parts of southern Cambria County early Sunday evening.

    July 27, 2014

  • pow28 Mount Olive church members reach out to those in need

    The members of Mount Olive United Methodist Church mark their faith by using a tape measure.
    The mission team of the Sidman area church uses tools such as tape measures to complete construction and repair projects to improve life for people in need and to help nonprofit organizations.

    July 27, 2014 1 Photo

  • Kernville Reunion will recall days gone by

    The 37th annual Kernville Reunion will start at noon Aug. 9 at Lorain Borough Park, 503 Green Valley St., and organizers are hopeful it’ll attract current and former area residents, especially people who attended Joseph Johns Junior High School.

    July 27, 2014

  • Scaife remembered for strong convictions

    At a weekend memorial service, publisher Richard Mellon Scaife was remembered by the archbishop of Washington as someone who had the courage to stand “for things that mattered.”

    July 27, 2014

Poll

What is the biggest key to reducing gun violence in Johnstown?

Tackling the area's drug problem.
Controlling folks moving into city housing.
Monitoring folks in treatment centers and halfway houses.
Tougher sentencing by the court system.
More police on the streets.

     View Results
Order Photos


Photo Slideshow

House Ads