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Pennsylvania State Senate
12/08/2024 05:25 AM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20150&cosponId=18274
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Senate Co-Sponsorship Memoranda

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Senate of Pennsylvania
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted: May 6, 2015 11:21 AM
From: Senator John P. Blake
To: All Senate members
Subject: Governor's Budget Package Legislation Regarding Pension Reform
 
In the near future I will be introducing legislation on behalf of the Governor that is included in the 2015-16 fiscal year budget relating to pension reform.

The legislation establishes a restricted account to guarantee that all actuarially-required employer obligations are paid in full. Additionally, $3 billion of current unfunded liability for PSERS will be refinanced through a pension obligation bond to take advantage of historically low interest rates, with all savings reinvested to reduce that liability, not to reduce current payments.

This legislation contributes to the Governor’s three-part strategy to address the unfunded liability in our Public School Employees’ Retirement System (PSERS) and State Employees’ Retirement System (SERS) to ensure the Commonwealth fully funds these two systems. Specifically, the plan:
  1. Institutes pension investment reforms to significantly reduce excessive management fees and overreliance on high risk investment strategies. These commonsense reforms will significantly reduce taxpayer costs for professional fund managers, seek less costly passive investment approaches where appropriate, and prudently maximize future investment returns through cost effective investment strategies;
  2. Eliminates “double dip” pension payments to charter schools permanently by amending our School Code; and
  3. Establishes a restricted account to guarantee that all actuarially required employer obligations are paid in full. A portion of the current unfunded liability – $3 billion – for PSERS will be refinanced to take advantage of historically low interest rates, with all savings reinvested to reduce that liability.
The recommended initiatives will produce savings to reduce our total long term liability by more than $10 billion. More immediate savings will reduce employer obligations by nearly $1.3 billion during the next five years, including nearly $370 million in savings for school districts and more than $900 million for the state. In addition, these actions will send a positive message to capital markets and bond rating agencies that the Commonwealth is poised to aggressively address our accumulated unfunded liability.

Most importantly, beginning in the 2016-17 fiscal year, future employer payments to SERS and PSERS will fully fund employer obligations and will begin to reduce the outstanding unfunded liability. Annual payments for both systems will continue to increase, but only modestly, and not beyond normal inflationary amounts.

I hope that you will join me by co-sponsoring this legislation.



Introduced as SB113