By Eric Boehm
for The Pennsylvania Independent
HARRISBURG PA – Gov. Tom Corbett will lay out his plans for next year’s state budget this morning (Tuesday, Feb. 4, 2014) in Harrisburg, with a $2 billion pension crisis elephant in the room.
That’s how much — about $1 out of every $15 the state plans to spend — Pennsylvania must pay the State Employees Retirement System (SERS), and the Public School Employees Retirement System (PSERS), in the 2014-15 budget. It’s a $600 million increase from the current year, with larger increases due in the next few budgets.
Pension costs are the largest area of the growth in the state budget. They threaten to swamp the state’s books with red ink, just as they are already overwhelming the 2014-2015 academic year budgets now being discussed by the Pottsgrove, Pottstown and Spring-Ford Area school districts, and dozens like them across the Commonwealth.
Aides declined to speak on the record about the governor’s address, but Corbett plans to talk about the pension crisis Tuesday. After laying out a specific plan last year that involved cuts in benefits for current and future state workers — a plan that went nowhere in the Legislature — Corbett will likely leave the specifics to the General Assembly.
There is a growing sense in the General Assembly that something must be done.
The state Senate president urged his colleagues to “attack” the pension issue. He seemed to suggest, though, that he aims for a solution to give more budget flexibility this year, possibly by deferring at least part of that $2 billion due next year.
That’s where much of the coming pension debate will center. Two views are competing over how to proceed: face the reality of the pension costs and make the full payments; or continue to make artificially low payments each year.
Underfunding the state pension systems is something of a tradition in Pennsylvania. The state has been doing it since 2003. That was the year the state Legislature voted to take a decade long “pension holiday” with the assumption robust financial market returns would make up for 10 years of directing pension dollars toward other programs.
- Read the remainder of the story by reporter Eric Boehm, titled “Cash or credit? PA facing $600 million in new pension costs in next budget” and published Monday by The Pennsylvania Independent, here.
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