Pennsylvania’s Senate Republicans plan to roll out a proposal to overhaul public pensions in early May, the first step toward making good on their promise to address pension debt before negotiating a commonwealth budget.
Caucus leaders have repeatedly suggested switching future hires into a 401(k)-style retirement system. Last month, the Senate majority leader said he might try to scale back unearned pension benefits for current state and public school employees.
But asked about the plan last week, said Sen. Pat Browne, R-Lehigh, was more comfortable talking about what isn’t in Senate Republicans’ proposed pension overhaul.
“There’s no borrowing in this plan, I can say that,” said Browne, who chairs his chamber’s Appropriations Committee.
The measure is expected to contrast with the plan presented by Gov. Tom Wolf, who wants to bring down state and school pension costs without changing retirement benefits. The governor’s plan would cut investment management fees and borrow $3 billion to shore up the school employees’ retirement system, essentially refinancing the larger of the two state funds.
“The governor may insist on that as part of a reform, I don’t know that at this point,” said Browne, speaking about Wolf’s borrowing scheme.
Democratic leaders are skeptical their colleagues across the aisle can pass sizable changes to the pension systems. Anything that curbs future retirement debt or reduces already-accrued debt is bound to be controversial.
“My belief is that they’re going to try to run something out of the Senate, for the sake of saying they’ve run something,” said Democratic Senate Minority Leader Jay Costa, D-Allegheny. “That will provide the optics that they’re looking for politically.”
But Costa does expect the parties to come together on some kind of pension pact as they work on a state spending plan with the governor.
“What it looks like, I can’t tell you,” said Costa.
The state’s pension funds for school and state employees are carrying a growing debt of $53 billion. The liability has ticked up due to retirement benefit increases, skipped state payments, and investment losses.