Pennsylvania officials have dedicated lots of lip service to the problem of underfunded pensions, but not much time, money or brainpower to fixing it – at least, not specifically.
And that doesn’t even get into the nearly $8 billion collective liability faced at the local level in Pennsylvania, home to no less than one quarter of the nation’s municipal pension funds – more than half of which are tracked at the state level using a paper-based reporting system.
State Sen. Judith Schwank, D-Berks, introduced a bill this week proposing a 25-person Public Pensions Review Commission to study the Commonwealth’s retirement systems for judges, police, firefighters, public school teachers and other state and municipal officials and employees.
According to legislative staffers, this would be a first.
“This issue will affect tens of millions of Pennsylvanians and their economic opportunities deep into this century, very possibly much longer. They deserve that we jointly search for the best policy solution, not tolerate its resolution as a contest of political strength,” Schwank wrote into her bill memo.
Senate Bill 604 would give the commission six months, $1 million – a “ballpark” figure, Schwank’s aides say – and the Joint Legislative Committe’s researchers to come up with specific recommendations to create a “stable” structure for state and local pensions.
The Senate Finance Committee has the bill, but no meeting dates scheduled.
Commission members would include:• Gov. Wolf and a pension expert of his choosing.• Two other pension experts appointed by Lt. Gov. Stack and state Sen. President Pro Tempore Joseph Scarnati III, R-Clearfield. • Majority leaders Sen. Jake Corman, R-Centre/Juniata/Mifflin, and Rep. Dave Reed, R-Indiana• Minority leaders Sen. Jay Costa and Rep. Frank Dermody, both D-Allegheny. • Executive directors of the Pennsylvania Municipal League and state associations of Townships, Boroughs and County Commissioners • Penn State, Temple and Lincoln universities’ presidents• State Revenue, Budget and Administration secretaries• Director of the Administration Office of the Pennsylvania Courts• State System of Higher Education Chancellor• Representative from the Pennsylvania Association of School Boards
The legislation also lists “three members of public unions,” but it’s unclear what that means, exactly, or how they will be chosen.
The legislation doesn’t mention the Pennsylvania Municipal Retirement System, which is the collective fund of about 600 local pensions, or the Public Employees Retirement Commission, which monitors 1,400 others.
Schwank’s staff says that was an oversight and the agencies will, in fact, participate.
With the possible exception of the appointed pension experts and PML executive director Rick Schuettler, all panelists suggested thus far are themselves pensioners through the statewide systems – a long-standing complication.
The basic concern in all of this is running out of money to cover cash payments and health coverage promised to, and partially paid for by, retirees during their working years.
Sometimes exacerbated by management fees, the liabilities partially result from basing payments due from workers and their employer public entities on overzealous investment returns assumptions.