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09/23/2014 10:26 AM
Pennsylvania House of Representatives
http://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20130&cosponId=12622
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MEMORANDUM

Posted: April 26, 2013 09:24 AM
From: Representative Chris Ross
To: All House members
Subject: Enacting Comprehensive Pension Reform to Keep the Promise
 
In the near future, I plan to introduce legislation implementing critically-needed reforms to our Commonwealth’s public pension systems, helping to avert future program cuts and tax increases at both the state and school district level. 
 
The legislation will enact balanced reform efforts in both the short-term and long-term, ending the proverbial “kicking the can down the road” on this issue.  This legislation will rebalance obligations to pensions by reducing the increase allowed in the collars; providing immediate relief in the 2013-2014 fiscal year.  Notably, the cost of the short-term relief will be neutralized by the savings from long-term reforms.  The proposed reforms in this legislation can be organized into two categories:
 
  1. Beginning in 2015, place new hires into a defined contribution plan that is attractive and flexible for employees while shifting risk away from the Commonwealth to avoid future unfunded liability concerns.
 
  1. Respect current employees by protecting retirement benefits already accrued, while making needed changes to future benefits for employment not yet rendered. This includes reducing the multiplier (current employees can still keep their higher multiplier by paying a higher contribution rate); capping pensionable compensation to 110 percent of the average salary of the prior 4 years when determining an employee’s final average earnings; capping pensionable income at the Social Security wage base, which is $113,700 for 2013; and determining an employee’s final salary by averaging the employee’s highest five years of compensation, whether earned before or after the effective date of the legislation.
 
Collectively, without these needed reforms, pension costs will consume approximately 60 percent of all new revenues in the 2013-14 fiscal year. That translates to more than $500 million, leaving little to fund the growth in core programs and services.
 
This legislation is a common sense approach that will ensure the long term strength of the system, while guaranteeing there are no changes to benefits for retirees and no changes to benefits already accrued by current employees through the effective date of the bill.
 
Please join me in cosponsoring this legislation so that we can keep the promise to both taxpayers and employees.  I have attached a copy of the legislation for your review.
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Introduced as HB1350