PA gov: Pension costs are ‘Pac-Man’ to the budget (VIDEO)
Pension reforms may start by targeting financially-struggling school districts
By Eric Boehm | PA Independent
NEW CUMBERLAND — Gov. Tom Corbett said Monday he is talking with legislative leaders about solving the state’s growing public pension costs. and a high-ranking member of the House GOP indicated that addressing the pension systems of financially strapped public schools would be a good first step.
In this year’s budget, Pennsylvania will have to spend about $1.6 billion in taxpayer dollars for the state’s two main pension funds — the Public School Employees Retirement System, or PSERS, and the State Employees Retirement System, or SERS.
The pension payments are expected to climb to more than $4 billion by the fiscal year that begins in July 2016, making the pension funds one of the largest cost drivers in state government, Corbett said.
“That is Pac-Man to the budget," Corbett said. "It is just eating up more and more of the budget, and we’re going to have to deal with that. There have been some receptive conversations that we’ve had with leaders.”
State Rep. Mike Vereb, R-Montgomery, confirmed that discussions have taken place. The first goal is pension reform targeting public school districts with the biggest financial problems, he said.
Neither Corbett nor Vereb gave specifics on what the plan might be, though Vereb said it could ultimately be tied to the state budget, which is supposed to be passed in June.
The higher pension costs in coming years are the result of a law passed in 2003 that systematically underfunded the pension plans for a period of 10 years with the assumption that market earnings would make up the difference.
The combined unfunded liability for the two pension funds exceeds $36 billion, though some studies suggest it may be more than $100 billion.