State Senate Appropriations Committee passes pension reform bill

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HARRISBURG, Pa. -- The Senate Senate Appropriations Committee met to make a change to major public employee pension plans in Pennsylvania. The committee moved to pass Senate Bill 1 which addresses state employee pensions in an 18 to 8 vote.

A packed room to discuss one of the most complex issues facing the State of Pennsylvania: state employee pension plans. Senators voted to amend Senate Bill 1 which addresses retirement options for state employees.

"From PennDOT to the court systems to administrative legislature, all commonwealth employees," explained Senate Majority Leader, Jake Corman (R), who introduced the bill. "The key component of this bill is to shift the risk away from the taxpayers. Right now, the tax payers have seen their contribution as the employer of these two systems go from $600 million in 2007 to excess of $3 billion now," he said.

It's a very expensive issue. According to the bill, there is $60 billion unfunded in retirement systems across the state which means a bigger burden on taxpayers and school districts across Pennsylvania.

"This bill we really get the long term changes within the system and kinda going forward with some significant plan design changes that will help us for liability and also help us in the long run cut the ultimate liability of the school districts," said John Callahan, Assistant Executive Director of the Pennsylvania School Board Association.

The bill, if signed into law, would make future pension plans comparable to 401k-style plans. Current retirees and current state employees would not be impacted, unless they chose to opt in. Newly hired state employees and public school teachers and employees starting in 2019 could be picking from 3 types of 401k-type plans, though. Senator Vincent Hughes (D), who serves the 7th district, sees a problem with the change.

"When we move to newer systems, the kinda systems that are being discussed, we put a lot of pressure on individuals to manage their retirement themselves, with the 401k style, and what we see all the research indicates, folks just don't have the capacity to handle their own personal retirements successfully," said Senator Hughes.

However, some supporters of the bill say it is long overdue and believe it will help the Commonwealth by generating traumatic savings for the state in the future.

Senate Bill 1 will be voted on in the senate tomorrow and could be on Governor Wolf's desk to sign into law sometime later this week.