|Posted:||January 14, 2015 03:44 PM|
|From:||Representative Justin J. Simmons|
|To:||All House members|
|Subject:||50% of year-end surplus to pay down pension liabilities|
|There is a significant current unfunded accrued liability with the Commonwealth’s State pension funds:
The State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS).
In the near future, I will introduce legislation that will mandate 50% of the year-end surplus to be transferred to SERS and PSERS to begin paying down the current large unfunded accrued liabilities.
The latest actuarial valuations show the following current actuarial unfunded accrued liabilities:
SERS = $17,899,395,019 (as of 12/31/13 valuation), and
PSERS = $35,121,000,000 (as of 6/30/14 valuation).
While the Federal Economic Stimulus Act prevented any surplus from being transferred to the Budget Stabilization Reserve Fund or other reserve fund in the last two fiscal years, it is time to utilize year-end surpluses to pay down known Commonwealth liabilities like the unfunded accrued liabilities of the state pension funds.
On June 30, 2014, the projected unappropriated General Fund surplus after lapses was $80,631,000. If 50% of this surplus were mandated to be transferred to the pension funds in proportion to the unfunded liabilities of the pension systems, $13,610,292 would have been transferred to the State Employees’ Retirement Fund and $26,705,208 would have been transferred to the Public School Employees’ Retirement Fund. These amounts may seem small in comparison to the total unfunded accrued liabilities of the pension systems but it is a big step in the right direction to start paying down the pension debt. Paying off a portion of the unfunded accrued liability debt stops the compounding of interest at a rate of 7.5% on that debt.
Please join me in my efforts to pay down known Commonwealth liabilities, which will improve Pennsylvania’s overall tax climate. If you are have any questions, please feel free to contact my Harrisburg office: 717-783-1673, firstname.lastname@example.org
Prior HB 1021
LAWRENCE, TOEPEL, DUNBAR, MASSER, AUMENT, HEFFLEY, DENLINGER , CUTLER , TALLMAN, MOUL , KAUFFMAN , EVANKOVICH, BENNINGHOFF , ROCK , COHEN , PEIFER , GABLER, GINGRICH , SCAVELLO , READSHAW , TOBASH, PYLE , FARRY, BOBACK and SCHLEGEL CULVER
Introduced as HB426