Rep. Schroder Votes 'NO' on Pension Bill Band-Aid, Says Problem Not Solved

Rep. Curt Schroder (R-Chester County) says he voted against a pension "reform" bill that he believes only postpones the pension crisis and creates even larger budget problems in the near future for Pennsylvania taxpayers.

From a Schroder press release:

"House Bill 2497 is not the answer to Pennsylvania's pension crisis," said Schroder. "In January, we will have a new governor and a new House. This important issue should not have been decided by a lame duck governor and 21 legislators who are no longer accountable to the taxpayers. Instead of passing a deficient and short-sighted piece of legislation, I believe we should have taken the time to thoughtfully consider a defined contribution pension plan for new employees, similar to a 401(k). This is the direction most of the country is taking and I believe it is the best solution for the long-term health of Pennsylvania's pension plans."

Pennsylvania is facing a multi-billion dollar unfunded liability in its pension systems. Schroder said that while HB 2497 addresses some of the more immediate issues concerning the pension system, without further changes the plan will again require huge taxpayer contributions in a few years that will force the issue to be revisited. "Anyone who believes this issue is now solved will be in for a rude awakening by 2015," Schroder said.

"The state employee and school pension systems currently have a guaranteed rate of return, and they have been underfunded for many years. This underfunding continues with passage of this alleged pension fix. With the economic downturn, we can no longer afford a system that guarantees a return on investment when the returns are not there. HB 2497 assumes that Pennsylvania will experience gains of 8 percent over the next several years even though recent gains have been only about half of that. It also assumes employee contribution rates will rise and make up the difference. It is highly speculative that either would happen."

The bill passed Monday evening in the House by a vote of 165-31 and is awaiting Gov. Ed Rendell's signature.