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Senate of Pennsylvania
Session of 2015 - 2016 Regular Session


Posted: January 15, 2015 12:09 PM
From: Senator Mike Folmer and Sen. Patrick J. Stefano
To: All Senate members
Subject: Restricting Public Pensions for Future Association Employees
We plan to reintroduce the “Restricting Public Pensions for Future Association Employees” legislation, Senate Bill 1169 of last session and cosponsored by Senators Folmer, Rafferty, Scarnati, White, Pileggi, Hutchinson, Dinniman, Brubaker, Argall and Eichelberger. This legislation was reported out of the Senate Finance Committee unanimously, as committed, last session.

As a small step toward addressing the many problems of Pennsylvania's public pension systems, Senator Stefano and myself, will soon be reintroducing legislation to remove future non-public employees of the Pennsylvania School Boards Association (PSBA) from being eligible for public pension benefits. Simply put, if you are not a public employee, you shouldn’t be on Pennsylvania’s pension system.

Pennsylvania’s public pension systems are drowning in red ink: PSERS (Pennsylvania School Employees’ Retirement System) has unfunded liabilities of over $27 Billion; SERS (State Employees’ Retirement System) has unfunded liabilities over $17 Billion. The combined unfunded liabilities exceed $44 Billion, over $8,000 for each Pennsylvania household. Even if we were to raise taxes $1 Billion a year to try to address these liabilities, it would take 44 years to resolve the Commonwealth’s current public pension problems.

A properly designed pension plan has a “healthy” funding ratio of at least 80%. SERS is 65.3% funded and PSERS is 69.1% funded. The funded ratios of the two systems are expected to continue to decline in the coming years, hitting a low of 55.2% for SERS and 59.4% for PSERS. These are prime reasons why Pennsylvania’s bond rating was recently downgraded.

Each year these problems are not addressed, SERS and PSERS fall deeper into debt. Payouts currently exceed income by $3 Billion a year. Having current or future employees pay for others’ future pension benefits represents a government-run Ponzi scheme.

If we keep ignoring these seas of red ink, they will continue to worsen, threatening both current and future benefits of retired teachers and state workers. By 2018, the state pension debt will rise to $65 billion, a staggering $13,000 owed by each Pennsylvania family.

Introduced as SB408