New Year, Same Old Pension Problems For Pennsylvania

Jan 25, 2017

In one of the state Capitol’s busy lobbies, there’s a clock that tracks unfunded pension liabilities. All day and night, that clock ticks upwards, adding billions of dollars to Pennsylvania’s debts every year.

The clock’s overseen by a small, dedicated group of pension overhaul advocates and on Tuesday, they dragged it up to the Capitol’s main rotunda to make a renewed call to lawmakers: find a way to halt the clock’s rising numbers, once and for all.

The clock currently places the state’s pension debts at more than $74 billion, a higher number than the $62 billion the state Independent Fiscal Office reports.

Both estimates are based on the most recent numbers released from the state employee and public school employee retirement systems. The difference is the state numbers calculate debt based on rolling averages, while the pension clock uses current market rates and continually factors in interest.

Eric Epstein, who runs the watchdog organization Rock the Capital, said that no matter how it’s calculated, the debt is much too high and lawmakers have put off finding a solution for too many years.

“We need to decide how much we’re going to give up to solve the problem. It’s going to have to be shared sacrifice," Epstein said. "Unless we deal with the pension crisis all we’re doing is nibbling around the corners and basically arguing what kind of garnish to put on the lobster.”

Epstein, a Democrat, was joined by a small, bipartisan group of reform advocates that included Republican Representative John McGinnis, of Blair County.

McGinnis plans to soon introduce legislation he pledges will begin to lower the debt next year, and get rid of the current unfunded liabilities entirely by 2037.

It would involve a roughly 14 percent increase in pension payments by the state and public school districts next year, with graduated increases of 2 or 3 percent after that.

McGinnis admits, it won’t be an easy plan to rally support for.

“It’s not going to be the best-tasting medicine to be sure," he said. "But this approach will be 100 percent effective for what ails our pensions."

Fellow republican Representative Paul Schemel, of Franklin County, was the only other lawmaker in attendance.

He said the reason there isn’t more legislative movement on pensions is that is doesn’t seem immediate. The commonwealth won’t see truly negative fiscal effects—like the loss of pension fund solvency—for a while.

“It’s fiscal death of the commonwealth,” Schemel said. “It takes 15 to 20 years to get there, but it’s death all the same.

He added that paying off the debt is “not a Republican or Democrat issue; it’s not a conservative or liberal issue. It is one that every one of my colleagues that understands it agrees with. It’s just a matter of having the debate as to how you’re going to do it.”