HARRISBURG, Pa. -- Governor Tom Wolf says he is looking forward to pushing a bill "across the finish line" which would act as Pennsylvania's first attempt at pension reform in years.
Senate Bill 1, which starts the process of moving retirement plans for state workers and teachers from a taxpayer-funded formula to a 401(k) style plan, passed the State Senate on Monday by a 40-9 vote.
Wolf applauded the vote afterwards.
"This pension compromise achieves my foremost goals: continuing to pay down our debt, reducing Wall Street fees, shifting risk away from taxpayers, all while providing workers with a fair retirement benefit," the governor said. "I look forward to working with House leaders to get this bill across the finish line."
The House State Government Committee planned a late-Monday vote, per House GOP spokesman Stephen Miskin, who added he expects the full House to take up the bill on Thursday.
The bill would impact all state employees hired after January 1, 2019, and all teachers hired after July 1, 2019.
It would move workers off the fully-taxpayer-funded pension plan and gives them the option of choosing one of three retirement systems. The first two are considered 'hybrid' plans, involving different levels of how much an employee contributes into their 401(k)-style plan, which fluctuates with Wall Street's performance.
Workers can also elect to have retirement funded entirely by a 401(k) option, similar to corporate plans.
However, the bill does little to address the state's growing pension debt. Every day, a state lawmakers are reminded of it on an up-ticking clock which sits in the Capitol's East Wing Rotunda. The current pension debt is an estimated $75 billion and growing.
Senate Bill 1, according to analysis from the Independent Fiscal Office, would actually cost taxpayers more than $500 million in the first ten years, before eventually saving an estimated $1.4 billion.
Supporters don't view SB 1 as a perfect solution, but a step in the right direction.
"It stabilizes (the debt). Stops the bleeding," said Sen. Mike Regan (R-Cumberland), who is one of the bill's co-sponsors. "We certainly have to look at that unfunded liability but this is a huge positive step forward."
Opponents, which there are on both sides of the aisle, have two different views. Some, like Senator Scott Wagner, believe the state needs to go towards a full 401(k) plan, similar to the private sector.
Wagner, a York County Republican who is running for governor in 2018, blames current governor Tom Wolf for vetoing a similar pension proposal in 2015. He believes Wolf is only voting the bill through for political reasons.
"People are saying to me, 'Scott, you should be happy with 50 percent of something rather than 100 percent of nothing. "Listen, we sent him a very good bill two years ago, and he vetoed the bill," Wagner said. "We have got to stop dancing around the campfire."
Wagner was the only Republican to vote against the bill Monday.
Senator Vincent Hughes of Philadelphia County was one of a small number of Democrats to also vote against SB1. His feelings, however, are opposite of Wagner. Instead, Hughes wants to see more pensions, and less 401(k).
Pension plans allow seniors to retire beginning at 65. Too often, Hughes says, he sees seniors working minimum wage jobs into their 70s or 80s because they were unable to make enough money in their careers to have a sustainable 401(k).
"All the research shows (401k) is not sufficient enough to sustain an individual in their retirement years," Hughes said.