Well-Intentioned Governor Corbett Addresses State Pension Fund Shortfall, But With a Significant Flaw

While I heartily applaud Governor Tom Corbett for attempting to address the mammoth $41 billion state employee pension fund shortfall which metastasized on the watch of his predecessors (particularly through the long eight-year reign of Edward "Spendell", who slept through the crisis), and while he has provided a good starting point to tackle this mammoth challenge, there is one serious flaw in his multi-pronged plan which should be amended, but which is unlikely to be.

Prior to the 2001 legislative pension grab, which enhanced pensions for all state employees, public school teachers, and legislators, members of the General Assembly were on a par with the rank and file in one respect, all receiving a 2% annual multiplier to determine the amount of their pension benefit.  The 2001 legislation enabled legislators to jump ahead of the rank and file, bumping them to a 3% multiplier while others entitled to state pensions would receive 2.5%.  (This meant that from 2001 forward, a legislator would be able to retire at about 100% of his or her final salary after 33 1/3 years of service while the rank and file employee would have to work 40 years to reach that point.)

For the record, the pension grab was approved by overwhelming margins of 176-23 in the House, 41-8 in the Senate, with purported conservative State Representative John Maher voting 'aye'. Representative Maher would tell us that he voted for the measure because the plans were overfunded at the time and actuarial projections were that the benefits grab would never cost the taxpayers a dime.  I wonder if he ever provided a 50% pension boost to the employees of the accounting firm he co-founded, a scenario in which his money would have been on the line rather than that of the taxpayers of the Commonwealth.

The reasonable and fair approach would be for Governor Corbett to request that all state employees and legislators revert to the level (and still generous)  playing field on which they stood prior to 2001, but this is not what he has proposed.  The Governor seeks to drop the legislators' multiplier from 3% to 2.5% and the rank and file from 2.5% to 2%.

The reason Governor Corbett has not sought to place legislators at the pre-2001 level is obvious.  He knows that if he attempts to diminish legislative pensions by a third, that his proposal will go nowhere because most members of the General Assembly look out for themselves first and enjoy the spectacular benefits they and their predecessors have carved out for them.  He also knows from the history of state government in Pennsylvania that legislators can and will refuse to pass a governor's legislative agenda if he stands in the way of their acquisition of wealth on the public dime.

The question can and should be asked why legislators should receive any pension let alone one that is 25% richer than career professional employees of the Commonwealth.  There is no provision in the State Constitution for legislative pensions and those that founded Pennsylvania surely could not ever have imagined that serving as a representative of the people would become a lucrative, lifelong career with spectacular retirement benefits.

Although there are several noble and selfless individuals in the General Assembly that have chosen to forgo participation in the state pension system, I know of not one member that has called for parity with rank and file employees in the multiplier that determines the benefit for those that participate.  This is an indication that greed continues to reign supreme in the halls of state government, another reason to conclude that any reform that has been enacted is of limited scope and value.  We continue to pay roughly one third a of a billion dollars per annum for one of the nation's most highly-compensated, underperforming, citizen-unfriendly bodies.