Legislation Quick Search
03/28/2024 12:49 PM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20190&cosponId=30493
Share:
Home / Senate Co-Sponsorship Memoranda

Senate Co-Sponsorship Memoranda

Subscribe to PaLegis Notifications
NEW!

Subscribe to receive notifications of new Co-Sponsorship Memos circulated

By Member | By Date | Keyword Search


Senate of Pennsylvania
Session of 2019 - 2020 Regular Session

MEMORANDUM

Posted: October 8, 2019 12:29 PM
From: Senator John P. Blake
To: All Senate members
Subject: Enacting the Recommendations of the Municipal Pension Task Force
 
In the near future and at the request of the prime sponsors of a bill introduced in the PA House of Representatives, I plan to introduce in the PA Senate companion legislation to Rep. Keith Greiner and Rep. Seth Grove’s bill which attempts to implement several pension reform recommendations made by the Governor and the Auditor General’s 2015 Task Force on Municipal Pension Reform. As of 2013, the Auditor General found that 562 of the 1,223 local government pension plans were classified as “distressed.”

As part of his report on the financial health of municipal pensions, the Auditor General proposed a series of recommendations to help reduce spending on pensions to ensure their long-term sustainability. Our legislation will codify the Auditor General’s recommendations. A few of the recommendations are:

Addressing the over inflation of a municipalities assumed rate of return by requiring it to use PMRS’s rate +/- 1%, to help control unfunded liabilities. If the plan does not reach their assumed rate of return, a lower assumed rate of return should prevent a spike in unfunded liability.

Increasing the retirement age to 60, and the minimum years of service to 25 years. When these pensions were originally created, life expectancies have risen nearly 20 years. Today’s pensions should be calculated using current life expectancy figures. Cap the amount of overtime that can be used in the calculation of an individual’s final average salary at 10%. This change can potentially save municipalities millions of dollars.

Currently, collective bargaining agreements permit any overtime and accrued leave payments to be included in the equation of an individual’s final salary level. A 2013 study by Allegheny County found that 30 retirees “spiked” their pension payout’s by adding in the overtime pay they acquired. This cost the county nearly an additional $1 million pension payout each year.

The recommendations included in this legislation will not impact current employees, but the solutions recommended by the Auditor General could save these municipalities millions over the foreseeable future.

Notwithstanding this proposal, I intend to introduce an alternative municipal pension reform bill. I have been working on this issue for several legislative sessions and I will soon be introducing a comprehensive set of reforms.

Please join me in sponsoring this bipartisan legislation to strengthen the financial sustainability of our municipal pension systems.