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House Co-Sponsorship Memoranda
House of Representatives
Session of 2015 - 2016
Regular Session
MEMORANDUM
| Posted: | February 6, 2015 11:32 AM |
|---|---|
| From: | Representative Karen Boback |
| To: | All House members |
| Subject: | Paying Down PSERS Unfunded Accrued Liability |
| Over the last two years of the previous session there has been much discussion and debate over the best plan of action for pension reform. Proposals have been put forth by several members that involve new pension plan designs for new hires and bonds to pay down unfunded liabilities. Many members are reluctant to issue bonds, one form of debt, to pay down the pension system’s unfunded liability, another form of debt. Pension reform is complex; there is no easy answer to the problem. The current unfunded accrued liability of the Public School Employees’ Retirement System (PSERS) is significant -- $35.1 billion and growing. I believe pension reform proposals are incomplete without a clear source of revenue to start paying down the unfunded liability of PSERS. In 2004, the Legislature was convinced to enact legalized casino gambling with the promise of property tax relief for every Pennsylvania homeowner. The reality of measurable property tax reform is debatable. Like me you may have constituents calling to plead for your help with property taxes. Sheriff sales in our counties are rampant. Constituents are losing their homes due to tax liens – they are unable to pay the property taxes on their homes. Casino revenue has been directed to other things besides property tax relief, including economic development capital projects and community specific local share account grants. As a result, I plan to introduce legislation instituting a temporary partial suspension of the local share account grant program in favor of using 50% of the local share revenue to aid in property tax relief through payments on the unfunded liability of PSERS. Local share revenue is derived from four percent (4%) of quarterly slots revenue. Because the agreement stands that “Casino Counties” are directly impacted by the industry and thus receive local share accounts, I have designed the legislation to allow 50% to continue in these coffers. The local share account revenue statutorily directed to school districts will not be included in this temporary re-direction. Once the PSERS fund reaches a funded level of 80%, the local share account programs for community-specific grants would resume at 100%. As the unfunded liability of the pension systems is reduced, employer contribution rates will stop increasing. In fiscal 2013-14, local share revenue from slots was $92.6 million. While fifty percent (50%) of this number may sound small in relation to the $35.1 billion unfunded liability of PSERS, the sooner we start paying off the debt, the sooner we stop the increase in employer contribution rates. I believe this legislation aligns itself with the original intent of the law whereby casino monies would have a direct impact on property tax relief. I hope that you will consider co-sponsoring my legislation as a meaningful component of pension reform and school property tax relief. |