One of the big questions going into Pennsylvania’s budget negotiations is whether — after years of failed attempts — the Legislature in Harrisburg will address tens of billions of dollars in unfunded liabilities in its two biggest pension funds.
Those are the State Employee Retirement System and the Public School Employee Retirement System — commonly known as SERS and PSERS.
As budget hearings continue, lawmakers are searching high and low for a way to ease that burden.
Thanks to benefit increases in the early 2000s and years of postponed payments, Pennsylvania faces more than $60 billion in pension liabilities over the next few decades.
A 2010 bill made the situation a little better, and, this fiscal year, the state met its required debt payment for the first time in 15 years.
But those payments are a strain. Right now, pensions constitute a one of the commonwealth’s biggest expenses, and much of that weight falls to taxpayers and schools.
So the legislature’s been trying — fruitlessly — to cut liabilities. The most common suggestion is switching out the current defined benefit pensions for 401(k)-style retirement plans, but nothing has passed.
At a House hearing, PSERS executive director Glenn Grell said reforming the benefit plan wouldn’t get at the root of the current problem anyway. Since Act 120 of 2010, he said, costs for new pension plans are actually “very low.”
Now, the Legislature must address the part of the problem that wasn’t fully addressed in 2010: finding the money to pay off the debt.
“Whether it’s a dedicated revenue source that would come to us or a dedicated revenue source that would go to support a bond issue, those are the kinds of things that would really address the funding in a serious way,” Grell said.
Many lawmakers still say they intend to push legislation that would change retirement plan options instead.
In a recent Facebook town hall, Gov. Tom Wolf — who didn’t include any pension overhauls in his latest budget proposal — indicated he’d be willing to sign a GOP-sponsored bill that would create a tiered plan, combining the current defined benefit model with a 401(k)-style plan.
That bill does not address the existing debt.
Various versions have already failed to get through the Legislature.