HARRISBURG, PA (10.12.10) – Commonwealth Foundation president and CEO Matthew J. Brouillette released the following statement regarding HB 2497 — the so-called SERS & PSERS pension reform legislation currently before the Pennsylvania Senate:
Over the next 30 years, HB 2497 will cost our kids and grandkids billions in future costs and lost opportunities. This is not reform at all-it is a bailout for politically connected labor union bosses.
Some argue that HB 2497 is just a “first step” toward pension reform. But we’ve heard this before. Remember when we were told that gambling was the “first step” toward property tax relief? It, too, was the first and last we heard of giving homeowners any tax reductions.
Real pension reform consists of moving to a defined-contribution, 401k-type retirement plan for new employees, just as virtually all of the private sector has done over the years. Only by making retirement costs current, predictable, and affordable can Pennsylvania get out of the pension crisis that threatens the economic vitality of the state.
This bill further reduces contributions to these already underfunded plans for the next ten years and further defers unsustainable liabilities in the name of “reform.” Of significant note, any financial projections remain predicated on an 8% assumed rate of return on assets.
Public employee union lobbyists are working hard for HB 2497 because they know only a lame-duck governor like Ed Rendell would sign it. Unfortunately, Senate GOP leaders, who have taken millions in union campaign contributions, are currently going along with the deal before Election Day.
EDITOR’S NOTE: Brouillette and CF senior fellow Richard C. Dreyfuss, an actuary and pension expert, will be holding media availability Wednesday at 10 am in the State Capitol media room foyer.
# # #
The Commonwealth Foundation (www.CommonwealthFoundation.org) is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.