As a debate on overhauling the state workers’ pension plans has inched along, Pennsylvania municipalities have clamored for help as they buckle under rising costs for emergency personnel pensions.
House Republicans aimed to throw down a life preserver Tuesday, as Majority Leader Mike Turzai voiced support for a plan to allow all boroughs, townships, and cities (except Philadelphia) to address pension debt largely by reducing benefits for future police and fire hires.
Rep. Seth Grove, R-York, who introduced the plan last year, said he’s trying to prevent a death spiral in municipalities faced with ballooning pension costs for their paid police and fire departments.
“If you don’t fix this, you will have tax increases to pay for pensions in the out years at the municipal level,” Grove said. “So if you don’t start fixing it now, it’s going to hit people right in the pocketbook. And people today, they have their 401(k), they see that tanking, and they don’t see anyone bailing them out.”
The plan would cut benefits for future hires, freeze benefits for current officers, and pay off any pension debt with what future employees pay into a new system. It would also end post-retirement health benefits for members of the new system. Retired police and firefighters wouldn’t be touched by the measure.
Lancaster Mayor Rick Gray called it a “darn good starting point.”
“It answers not only the promises made in the past,” Gray said, “but prospectively shows what can be done in the future.”
But the Pennsylvania Fraternal Order of Police opposes the plan, saying there’s a less painful way to cut costs for cities – by consolidating hundreds of individual pension plans for emergency personnel across the state.
“We have over 960 separate individual police pension plans,” said FOP President Les Neri. “Each one requires an actuary cost. Each one requires an accountant cost. Each one requires a money manager cost.”
“Consolidation without benefit reform doesn’t mean very much at all,” countered Rick Schuettler, director of the Pennsylvania Municipal League, which represents local governments. “And the obvious evidence of that is the state plans. They’re consolidated; they’re not doing any better.”
Brian Jensen, head of the Pennsylvania Economy League of Southwestern Pennsylvania, praised the plan for allowing “portability” – police officers would be able to carry their pension benefits to another department if they were to move.