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Pennsylvania House OKs $1.8 billion pension boost for government and public school retirees

 A stately building with a large green dome roof.
Matt Rourke
/
AP
The Pennsylvania Capitol is seen, Feb. 21, 2023, in Harrisburg, Pa. Democrats who control the state House of Representatives on Tuesday, Nov. 14, advanced an estimated $1.8 billion boost to the pensions of Pennsylvania state government and public school retirees, with supporters saying they have been hard hit by inflation.

Democrats who control the state House of Representatives on Tuesday advanced an estimated $1.8 billion boost to the pensions of Pennsylvania state government and public school retirees, while some Republicans said taxpayers will unfairly shoulder the financial burden.

The legislation passed 140-63, with every Democrat supporting it.

It now goes on to the GOP-controlled state Senate, where it faces an uncertain future.

Gov. Josh Shapiro’s office declined to say whether the Democrat supports the bill, but would continue to review it as it moved chambers. The state's teacher's union hailed the legislation as “long overdue.”

The bill’s sponsor, Rep. Steve Malagari, D-Montgomery, said during floor debate that the bill is a modest request to help tens of thousands of pensioners with their financial struggles amid steep increases in inflation.

“Our teachers, our public servants deserve a retirement reflecting their commitment and not to be marred by financial hardship,” Malagari said.

Most House Republicans opposed the bill, saying the state has sought to help the low-income older Pennsylvanians by boosting subsidies for property taxes and rent. They said pensioners receive Social Security, which has been boosted by cost-of-living adjustments to reflect inflation.

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Rep. Brad Roae, R-Crawford said that the legislation was “so expensive it cannot be funded in one year," and could impact local property taxes as school districts have to shoulder the costs.

“Not to downplay anybody’s financial plight, but there are a lot of people that never worked for the state, never worked for the school district, that have much worse financial situations in retirement than retired school employees and state employees that we’re trying to help here,” he said.

House Minority Leader Rep. Bryan Cutler, R-Lancaster, recalled the past management of the state’s school employee pension system that included deferred payments and steep increases in property tax bills to help make up for it.

“For years, the General Assemblies of the past used the public pension system like an irresponsible teenager with a credit card,” he said. “Unfortunately, it has been the property taxpayers who continue to pay the price for those past mistakes. And this is the important part. They will continue to pay if this legislation is enacted in its current form."

Under the bill, an estimated 69,000 pensioners would see an average annual bump in their pensions of a couple hundred dollars a month, for a total cost of nearly $1.8 billion, according to independent actuarial analysts.

The state would be on the hook to pay back most of it in annual installments over 10 years, while school districts also would owe a portion over that period.

More than 25,000 retirees from state government would see an average annual increase of $2,240 in the first year while roughly 43,500 retirees from public schools would see an average annual increase of $3,040 in the first year.

Eligible state government retirees are at an average age of nearly 80, and are expected to live an average of 12 years. Eligible public school retirees are at an average age of nearly 83 and are expected to live an average of 10 years.

Labor unions backing the change say pensioners who retired before 2001 have not had a cost-of-living increase since then, and are struggling to get by since inflation spiked two years ago. A 2001 law fattened pensions for people who had not yet retired, but did not apply to those who had already retired.

Neither of the state's big pension systems are fully funded. In a statement, Senate Majority Leader Joe Pittman, R-Indiana, said the chamber would take a hard look at the bill with that in mind.

“I have genuine empathy for those who retired before 2001 and this is something which will be thoroughly reviewed," Pittman said. "Obviously, we must be careful about the fragile nature of our pension funds.”

The push for the pension increase comes as the Pennsylvania state government is awash in cash after years of running deficits. It is sitting on approximately $14 billion in reserves, or almost one-third of its approved budget of $45 billion for the current fiscal year.