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House Co-Sponsorship Memoranda
House of Representatives
Session of 2015 - 2016
Regular Session
MEMORANDUM
| Posted: | March 27, 2015 11:20 AM |
|---|---|
| From: | Representative John D McGinnis |
| To: | All House members |
| Subject: | Repayment of State Pension Debt |
| In the near future, I will be introducing legislation to amortize the current unfunded accrued liabilities (UAL) and any new unfunded liabilities of SERS and PSERS over 20 years with level dollar funding. Without question, the biggest financial problem facing the commonwealth is the pension debt incurred since 2001. Act 9 (2001) and Act 38 (2002) increased already generous retirement benefits, while Act 40 (2003) and Act 120 (2010) made underfunding of those benefits the de facto policy of Pennsylvania. According to the PEW Foundation and others, only New Jersey among the 50 states is worse than Pennsylvania when it comes to funding its pensions. Only two states have worse credit ratings than Pennsylvania and this is a direct result of pension underfunding. Right now, just the annual interest on the pension debt is over $4 billion, equivalent to the full yearly salary and benefits for over 50,000 teachers. The situation is so dire that there are likely scenarios where the pension assets will become exhausted in the next 8 to 15 years. When that happens, benefits paid to retirees may well consume 40% to 50% of the general fund. The consequences for our future only get worse as we delay dealing effectively with this problem. The right approach is to follow the recommendation of the 2014 Blue Ribbon Panel on Public Pension Funding commissioned by the Society of Actuaries and commit ourselves to paying off the current UALs of SERS and PSERS over 20 years with level dollar funding. It is not just the responsible thing to do after more than 10 years of serious underfunding--it is absolutely necessary to prevent substantial and irreversible harm to the future of Pennsylvania. I would be most willing to discuss this with you and I would appreciate your support for securing Pennsylvania’s future by co-sponsoring this bill. |
Introduced as HB900