Friday, July 10, 2015

GUEST COLUMN: Gov. Wolf irresponsible in vetoing historic pension reform

By State Rep. Warren Kampf & State Rep. Tom Quigley

While we are proud of our work to pass a serious, sensible pension reform bill, we are saddened to report that Gov. Tom Wolf has just vetoed that bill.

The governor is claiming everything from not enough savings to being unfair to public employees as his reasoning for the veto, but each of his claims rings hollow.

This legislation — Senate Bill 1 — would save taxpayers $10 billion, would preserve the benefits of current employees, and provide new employees a fair hybrid retirement plan much like the 401(k) plans of the private sector. This legislation would also be a major step forward in helping to control property taxes across the state.

This common sense pension reform was to be a turning point in securing Pennsylvania's economic future. It would help stop the ever-growing pension liability burdening state government and school districts while still providing a fair retirement benefit for new employees and keeping our promise to current enrollees and retirees. But Governor Wolf says, "no."

Employer contributions into the pension system have been driving the increases in school district costs — which have led to increases in school property taxes for homeowners. Without changes, an amount equal to or greater than 30 percent of the salaries of teachers and other school employees will go to funding these looming pension costs.

That’s money that cannot go to books, infrastructure or classroom instruction.

The two public pension systems have a combined "unfunded liability" — the difference between the amount of benefits due enrollees and assets available — of at least $53 billion. The estimated cost of this liability is more than $30,000 for every Pennsylvania working resident.

The House has taken the right and responsible action in addressing this pension crisis. This legislation would save taxpayers approximately $10 billion while providing a more predictable, sustainable cost structure for the future.

Under Senate Bill 1, future state employees first hired on or after Jan. 1, 2016, and future school employees first hired on or after July 1, 2016, would be assigned to a defined contribution/cash balance hybrid plan, similar to the 401(k) plans offered by the private sector.

By moving future employees to a defined contribution/cash balance plan, Senate Bill 1 would shift risks associated with volatile markets and benefit enhancements away from taxpayers; it also would enhance the portability of future state and school employee retirement benefits.

The bill would stop the creation of new unfunded liabilities associated with adding new members to the defined benefit plan. Quite simply, we are forcing the state to stop digging the hole that taxpayers are in.

Legislators are also included in this change as they, too, would either switch to the new system upon their re-election (for current legislators in the pension system), or simply start in the new system for newly elected legislators.

How could the governor oppose this?

We urge the governor to join us in setting a sustainable, responsible fiscal path that saves taxpayers billions of dollars.

We urge him to reconsider his decision.

State Rep. Warren Kampf is a Republican who represents the 157th House District in parts of Chester and Montgomery County. He was first elected to the Pennsylvania Legislature in 2010. State Rep. Tom Quigley is a Republican who represents the 146th House District in parts of Montgomery County. He was first elected to the Pennsylvania Legislature in 2004.

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