PA Budget Live Chat

MAY 29, 2015  | by COMMONWEALTH FOUNDATION

Friday at noon we'll be hosting a live chat on the Pennsylvania state budget.


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Audio: The 'Same Old' Pension System Isn't Good Enough

MAY 28, 2015  | by JONATHAN REGINELLA

During his budget address, Gov. Wolf stated, "It's not good enough to just say no and continue with the same old same old.”  Why, then, does he continue to sidestep Pennsylvania’s pension crisis?

One explanation is that government unions, some of Gov. Wolf’s biggest financial supporters, benefit from “the same old same old” system and want the governor to continue blocking real reform.

Matt Brouillette, CF’s president and CEO, sat down with WPHT midday host Dom Giordano to talk about the pension crisis in Pennsylvania and why ignoring the problem is no longer an option.

Matt explains that defined benefit plans—like public school pensions—create an unmanageable burden for taxpayers and leave public employees at the mercy of politicians to properly fund their retirement. In contrast, a 401K-style retirement plan is affordable for taxpayers and portable, dependable, and protected from political manipulation for public workers.

Click here or listen to the interview below.

The Dom Giordano Show airs every weekday from 9 am – 12 pm. 

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

And for mobile listening, get the SoundCloud iPhone and Android apps.


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Union Contract Agreements Bolster Case for Collective Bargaining Transparency

MAY 20, 2015  | by BOB DICK

The Wolf Administration finalized contracts with two government unions yesterday, perfectly encapsulating the failings of the current collective bargaining process.

In a terse press release, the Wolf Administration announced contract agreements with the American Federation of State, County, and Municipal Employees (AFSCME) Council 13 and the United Food and Commercial Workers (UFCW) Local 1776.

According to the Wolf Administration, the contracts generally maintain the status quo, which isn’t a promising revelation for public employees or taxpayers who have no interest in subsidizing union politics.

Additionally, a 2.25 percent pay increase was agreed to for employees with at least one year of continuous service. Charles Thompson of PennLive reports the pay increase will cost Pennsylvanians $23 million in the coming fiscal year.

Even if the public does not approve of these new contracts, there isn’t much they can do to prevent implementation. The agreements were hammered out behind closed doors, and the details were only released after both Gov. Wolf and two of his campaign contributors agreed to the deals.

Is there a better example of a process in need of transparency?

Had the Senate’s trio of transparency bills been codified, the process would have been different. Taxpayers could have watched the contract negotiations play out, and they would have been provided the contracts and their costs before ratification, giving them an opportunity to weigh in on the deals.

Fortunately, lawmakers still have time to make the collective bargaining process transparent. The wishes of government unions to keep the process secret should not prevent lawmakers from giving Pennsylvanians a seat at the table. 


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Audio: House Expands State Scholarship Programs

MAY 20, 2015  | by JONATHAN REGINELLA

Last week, Pennsylvania’s House of Representatives approved a significant expansion of two state scholarship programs, the Educational Improvement Tax Credit (EITC) and the Opportunity Scholarship Tax Credit (OSTC).

Since 2001, EITC and OSTC have awarded over 430,000 scholarships to students across Pennsylvania, providing lifeboats to children looking to escape dangerous and failing schools.

Matt Brouillette recently spoke with Gary Sutton on WSBA about House Bill 752 and the benefits that its $100 million expansion will bring to children hoping to pursue school choice programs.

Matt explains that EITC and OSTC build connections between corporations and their communities. These programs allow businesses to “see a direct benefit from their tax dollars going to help educate children”–rather than sending that money to strangers in Harrisburg.

Listen below or click here to hear Matt’s interview.

The Gary Sutton Show airs daily on WSBA 910AM in the York area.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

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Audio: Gov. Wolf's Stealth Unionization

MAY 19, 2015  | by JONATHAN REGINELLA

Gov. Wolf’s recent executive order has been unveiled as an illegal attempt to unionize home healthcare workers–but the governor is claiming his order does not pave the way for unionizing workers.

CF’s Matt Brouillette was recently on KDKA radio with Mike Pintek to discuss this stealth unionization of thousands of homecare workers and and how it could harm the very individuals the governor is claiming to protect.

Matt unveils the reasoning behind this forced unionization by describing it as “an under the radar effort to allow for these unions [SEIU and AFSCME] to profit off of the backs of these homecare workers”–profits that would be pocketed by some of Wolf’s biggest 2014 campaign supporters.

Gov. Wolf’s stealth effort would also effectively create law through his executive order, an unconstitutional breach of power that is currently being contested in the Commonwealth Court of Pennsylvania.

Listen below to learn more about Gov. Wolf’s illegal, stealth unionization attempt.

Mike Pintek is on KDKA Radio weekdays from 12 pm to 3 pm.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

And for mobile listening, get the SoundCloud iPhone and Android apps.


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Audio: Fixing the State's Broken Pension System

MAY 18, 2015  | by JONATHAN REGINELLA

Public pensions have created one of the worst financial crises in Pennsylvania’s history—a monstrous, $50 billion debt that Gov. Wolf can no longer ignore. To prevent the crisis from growing, the state Senate passed Senate Bill 1 to convert a broken retirement system into a stable and fair plan for public employees and taxpayers.

Matt Brouillette, CF’s president & CEO, sat down with Mike Pintek on KDKA to discuss these legislative and structural reforms.

Meanwhile, government union leaders are attempting to fight pension reform by making deceptive (and debunked) claims, which Matt refutes. He points to pension debt projections for local school districts that simply “do not have enough money in [their] communities to pay”.

Click here or listen below to hear more.

Mike Pintek appears on 1020 KDKA weekdays from noon to 3 pm.

Follow Commonwealth Foundation’s SoundCloud stream for more of our audio content.

And for mobile listening, get the SoundCloud iPhone and Android apps.


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State-Run Health Exchanges: A Terrible Track Record

MAY 14, 2015  | by THOMAS KUTZ, JAMES PAUL

Governor Wolf is taking a big risk. His administration is preparing a Pennsylvania-operated Obamacare exchange if exchange subsidies from the federal exchange, or healthcare.gov, are ruled illegal by the U.S. Supreme Court in June.

State-run exchanges have a terrible track record. Of the 17 states opting to run their own exchanges, nearly half face financial trouble. Instead of enhancing competition and making health care more affordable, state exchanges have faced constant cost overruns and technological failures, leading to new taxes and restricted consumer choice.

In many cases, exchange costs are higher than anticipated—largely thanks to labor intensive call centers.

  • Nevada spent $72 million for the initial set up of its exchange and an additional $57 million after new costs emerged.
  • In Colorado, taxpayers are on the hook for a $21 million call center that was originally estimated to cost $13.6 million.
  • Vermont plans to spend almost $200 million to set up its exchange in addition to an estimated $51.8 million in annual operation costs.

Despite cost overruns, some states were still unable to create a working exchange.

As costs exceed projections, states have resorted to new methods to raise revenue.

  • Washington D.C. raises $25 million of its $28 million budget for the exchange through “user fees,” which are taxes placed on consumers’ health plans.
  • The state of Washington also assesses a tax on all health insurance premiums, and the state charges insurers a monthly fee for each exchange user.
  • In Rhode Island, the state legislature is considering a proposal that would assess an additional $11.8 million in “surcharge” taxes.

Many providers are choosing not to participate in state-run exchanges because exchange plans offer lower reimbursement rates than private market plans. Insurers also fear that recipients in the exchange will not be able to continue paying premiums.

  • As a result, consumers face limited choice and restricted competition from providers.
  • Consumers in many states have as few as two choices for health insurance. The Wall Street Journal reports that many hospitals have merged as a result of the negative economic impact of Obamacare.

As state exchanges fail, four states—including Oregon and Nevada—opted to join the federal marketplace. In addition, Hawaii and Massachusetts are discussing a possible transition to federal control. But even the transition to healthcare.gov is expensive, costing around $20 million per state.

Given the poor track record of state exchanges, Pennsylvania should stay with healthcare.gov and urge Congress to replace Obamacare with reforms that work.


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Reforming the Welfare Benefits Cliff

MAY 14, 2015  | by NATHAN BENEFIELD, ELIZABETH STELLE

Ending the Cycle of Welfare

Imagine you’re a single mom earning $47,000 a year (or $22.59 an hour) working full-time as an assistant manager at large department store. Your boss pulls you aside with great news; you’re being offered a $1,000 promotion to manager. But your heart sinks when you realize the raise will cost you at least $6,000 in lost child care subsidies because your income is now too high.

Reluctantly you thank your boss, but explain that you can’t take the promotion.

This is a hypothetical situation, but for many families it’s is all too real.

All of us can agree on the need for a social safety net. Unfortunately, some of the well-intentioned programs we’ve created have unintended consequences—specifically, a benefits cliff which discourages work and punishes success.

At this cliff, families can lose tens of thousands of dollars in benefits if they earn just $1 more through work. Too many families are being trapped in a broken welfare system, it’s time for a change.

Representatives Steve Bloom and Tom Murt have put together legislation to address the benefit cliff in child care subsidies.  The House Poverty Initiative, led by Rep Dave Reed and his team, identified the cliff as a barrier to success.

Our social service programs should reward and encourage success, not penalize it. By offering incentives for work and smoothing the benefit structure, we can help move families from poverty to prosperity.

As lawmakers move forward and debate this proposal, we have an opportunity to bring attention to the benefits cliff problem in many other programs. Hopefully, this initiative can become a model for reform, not only in Pennsylvania, but across the country and in Washington DC, which mandates many of the barriers to success.


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134 Billion Reasons to Embrace Debt Reform

MAY 14, 2015  | by BOB DICK

Every Pennsylvanian’s share of state and local debt increased by 20 percent over the last twelve years. In 2002, per capita debt totaled $8,693. Today, the total is a shade under $10,450.

This trend must be reversed. Future generations should not be forced to shoulder the consequences of present-day overspending. A greater debt burden means a lower standard of living and quality of life. 

Pennsylvania State & Local Government Debt
Debtor Debt Outstanding Per Person
Total State $50,371,095,000 $3,939
   State $10,899,795,000 $852
   State Agencies & Authorities $39,471,300,000 $3,087
Total Local $83,229,451,000 $6,509
   School Districts $26,382,245,737 $2,063
   County/Municipal/Twp/Other $56,654,115,000 $4,431
Total  $133,600,546,000 $10,448
Sources: Governor's Executive Budget (http://www.budget.state.pa.us) December 2014 data; PA Dept of Education (http://www.pde.state.pa.us) June 2013 data; U.S. Census Bureau (http://www.census.gov) 2012 data

Acknowledging the importance of reining in state debt, a group of lawmakers introduced four pieces of legislation to begin chipping away at the nearly $134 billion behemoth. The following bills are the result of work done by the House GOP’s Debt Working Group:

  • House Bill 928: Establishes annual borrowing limits on Redevelopment Assistance Capital Projects (RACP) and Public Improvement Projects (PIP).
  • House Bill 929: Brings transparency to the debt issuance process by requiring the governor to provide a detailed report to the General Assembly describing the capital budget projects financed with debt.
  • House Bill 930: Lowers the RACP debt ceiling by $50 million each year starting in 2018 until it reaches $2.95 billion in 2027. A similar reform passed back in 2013.
  • House Bill 931: Requires legislative approval before entering into a leased-back debt or installment purchase agreement.

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The Monster at the end of this Blog Post

MAY 13, 2015  | by NATHAN BENEFIELD

Grover Pension Monster

One of my favorite children’s books is titled "The Monster at the end of this Book." In it, Grover (of Sesame Street fame) pleads with the reader not to turn the page, or else you will unleash the horrible monster. As it turns out (Spoiler ALERT), lovable furry old Grover himself is the monster, and all is well.

Children are entertained by Grover's protestations, but never frightened by all his warnings against turning the page, as they are quite silly.

Similarly, government union leaders are making dramatic but misleading objections against public pension reform. Their scary rhetoric—that lawmakers are "stealing retirees pensions," that pension reform will "cost taxpayers billions," that legislators are "destroying the middle class" and "taking away retirement security"— has been debunked and should not be taken seriously.

In reality, pension reform ensures the integrity of government employees' retirements and saves taxpayer dollars.

Thankfully lawmakers in Pennsylvania have, like children reading "The Monster at the end of this Book," pressed on with pension reform, understanding that the most dangerous course of action is to do nothing.

Today, the State Senate passed Senate Bill 1 (read our news release on that), by at 28-19 vote. SB 1 would create a hybrid system, with a defined contribution plan and a cash balance component, for all new hires. Yesterday, the State House advanced House Bill 727, which would offer a defined contribution plan for all new hires.

Pennsylvania should follow the lead of 18 other states that have moved to a defined contribution or hybrid pension plan—without seeing the horrors claimed by union leaders—delivering affordable and predictable retirement benefits, which can’t be politically manipulated or underfunded.

See Commonwealth Foundation’s pension reform toolkit for more information on pensions.


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The Commonwealth Foundation is Pennsylvania's free-market think tank.  The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.