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Benefit costs, cuts raised

Pension woes discussed

HARRISBURG — Pennsylvania’s approach to a looming spike in pension obligations for state and public school employees should include a discussion of reducing the cost of current workers’ future benefits, even if it means challenging state constitutional law that has traditionally protected such benefits, a top state lawmaker said Monday.

The $1.1 billion the state is paying for pensions this year is scheduled to rise to $4.3 billion in five years. The obligation will triple for school districts over the same period.

Senate Appropriations Committee Chairman Jake Corman, R-Centre, said that pension changes “absolutely, positively” have to happen and that he hopes a plan will be in place with the annual state budget that is to be assembled one year from now.

“There’s no tax increase that is palatable, there’s no spending cuts that are palatable to make room for the contributions of where this pension obligation would go for the state,” Corman said. “The school districts would all begin to go in the red.”

In recent weeks, Gov. Tom Corbett has raised the subject with top lawmakers and said his administration is analyzing legal issues involved with pension changes in hopes that the Legislature will address it next year.

His spokesman, Kevin Harley, said potential changes for current employees will be part of that discussion “because the current system is not sustainable.”

Currently, about 385,000 people are active employees in the state’s two major retirement systems, the Public School Employees’ Retirement System and the State Employees’ Retirement System.

Corman said he believes that reduction of future benefits for current employees must be considered, despite long-established legal interpretations that dictate that pension benefits promised the day of hire to school employees and government workers may not be reduced.

“I think that’s something you have to look into,” Corman said.

Retirees’ benefits, he said, are “untouchable.” While he acknowledged that courts have traditionally ruled that public employers cannot reduce benefits for current employees, he also said exempting judges and court employees from the system might help “in getting something to hold.”

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