Video: Sen. Corman says structural changes necessary in pension plan
Favors change to defined contribution plan
By: Eric Boehm | PA Independent
HARRISBURG — Reforms to the state’s pension system will have to address structural problems and not simply defer payments to the future, the chairman of the Senate Appropriations Committee said Monday afternoon.
But the General Assembly probably won't undertake those changes until next year.
Speaking at the monthly luncheon of the Pennsylvania Press Club, state Sen. Jake Corman, R-Centre, said he favored making structural changes to the state pension system in light of coming cost increases that will see an estimated $4 billion of the state budget consumed by pensions by 2016.
At that point, he said, traditional budget battlefields such as funding for higher education and basic education will be drowned out by the pension crisis, which will consume $1.7 billion of next year’s budget, and the costs will keep climbing.
“I’m all in for alleviating it, only if we make structural changes so that we can look forward and be comfortable that we can match those payments,” Corman said, adding that it would probably factor into next year’s budget plan.
Corman told reporters he was still developing a plan of approach, but indicated changes for benefits of future employees should be considered along with changing future benefits for current ones.
“I think that’s something you have to look into. Again, it would only be moving forward for current employees, not anything retrospective,” he said.
He said he wants to see a change to a defined contribution plan, which would save costs in the long run by restructuring how state workers earn benefits.
Courts have previously ruled that any changes to existing employees’ benefits are a violation of law, and unions strongly oppose any changes that would reduce benefits, leading to major confrontations in recent years in states where Republican majorities have tried to rein in pension costs.
Dave Fillman is president of Council 13 of the American Federation of State, County and Municipal Employees, or AFSCME, which represents state workers in Pennsylvania. He said current employees should not be punished because they have made their obligatory contributions over the years.
Gov. Tom Corbett has spent the past month focusing on the state pensions and their effect on the budget.
Pennsylvania’s two major pension systems are a combined $35 billion in the red, thanks to lawmakers’ decision to deliberately pay less into the plans for a decade starting in 2003, as well as investment losses of $30 billion because of the economic collapse of 2008.