September 22, 2016
Dennis Yablonsky, Rob Wonderling and Gene Barr
The Pennsylvania Senate and House of Representatives passed different versions of state pension reform earlier this year. But they're not done yet.
So we're encouraged by those legislative leaders who have indicated their intention to bring the issue back up in the fall and work towards passing legislation with substantive reform that can be signed into law by Gov. Tom Wolf.
We share their sense of urgency to right our state's fiscal ship as the cost of inaction continues to rise.
There are only a handful of session days left before the General Assembly returns home for the November elections. Waiting until next session and starting from scratch on a new bill with new members will only cost Pennsylvania's taxpayers more.
The time to act is now.
Our three organizations – the Allegheny Conference on Community Development, the Chamber of Commerce for Greater Philadelphia and the Pennsylvania Chamber of Business and Industry –have worked together for many years to advance policies that improve Pennsylvania's economic climate and competitiveness.
Our organizations support thousands of employers and hundreds of thousands of jobs across the Commonwealth.
While we partner on a variety of critical issues, there is no issue that energizes our joint efforts more than the need to address the rapidly increasing costs and structural problems of the state's two public pension funds – the State Employees' Retirement System (SERS) and Public School Employees' Retirement System (PSERS).
The need for meaningful state pension reform is the number one public policy priority for each of our organizations.
Currently, SERS and PSERS –which include more than 800,000 retirees and current workers – are facing a more than $58 billion shortfall.
At the same time, mandated state contributions for public employees and school employee pensions are consuming a growing share of the state's budget: more than 60 cents of every new dollar in state revenue – revenue generated by taxpayers – goes toward the state's required pension payments.
The state's Independent Fiscal Office projects that pension payments will grow from $1.69 billion this year to $3.34 billion in 2019-20. Meanwhile, the ability of the state and school districts to maintain, let alone improve, basic services will be further restricted.
What does a future without real pension reform look like? Taxes will almost certainly have to rise; services may very well be cut; and the state's credit rating will continue to suffer.
Now is the time for our state's legislative leaders to join together in a bipartisan fashion to push this issue over the finish line.
The fact is, the workplace has evolved tremendously, including employee demographics and the tendency for individuals to frequently change jobs and careers.
Much of the private sector has acknowledged this evolution by instituting retirement plans that reflect the new reality – namely defined-contribution plans that are portable and provide more discretion for the employee to make decisions concerning savings and retirement.
We have long supported measures to transition state employees and public teachers into a 401(k)-style plan used by most private enterprises throughout the Commonwealth.
However, recognizing the need for compromise, we urge lawmakers to pass substantive pension reform legislation this session that still maximizes cost savings, shifts long-term risk off taxpayers, and provides adequate retirement security for beneficiaries.
Every Pennsylvanian – from taxpayers to state and public school employees to public school students – is affected by our out of control pension costs.
Let's join together and seize the opportunity to chart a sustainable and predictable forward path for the Commonwealth and pass meaningful pension reform this fall.
Dennis Yablonsky is CEO of the Allegheny Conference on Community Development. Rob Wonderling is President and CEO of the Chamber of Commerce for Greater Philadelphia Gene Barr is President and CEO of the Pennsylvania Chamber of Business and Industry.