Some positive news emerged last week, Gov. Wolf agreed—as part of a lawsuit filed by Rep. Steve Bloom and Rep. Seth Grove—to a temporary deal to keep the Public Employee Retirement Commission (PERC) operating as an independent agency.
Under the deal, PERC employees will be paid through the Office of the Budget, but will continue to be independent—reporting to the PERC board, not to the governor’s office. Moreover, PERC will be able to continue analyzing pension bills.
Current law prevents the legislature from voting any pension reform bill without an analysis from PERC. Gov. Wolf’s veto of PERC funding and plan to move PERC employees not only threatened the independence of PERC, but undermined the prospects of pension reform.
Of course, Wolf spokesman Jeff Sheridan denied that this was the intent:
The administration did not propose the elimination of PERC with its line item veto or its 2016-2017 budget proposal. PERC and the Office of the Budget reached an agreement in February that ensures that PERC can continue to carry out all functions related to its municipal pension obligations.
Commonwealth Foundation, however, caught Sheridan's doublespeak. In fact, the Governor’s Executive Budget explicitly says, “This budget includes…the elimination of the Public Employee Retirement Commission.” Later it mentions the plan to “Abolish the Public Employee Retirement Commission to eliminate redundancy.”
Sheridan later retracted his statement to Capitolwire (paywall)
[EDITOR'S NOTE: The original story was altered to remove a portion of Sheridan's statement indicating Wolf's 2016-2017 budget proposal did not include the elimination of PERC. In an email sent a day after the quote was provided, Sheridan acknowledged the governor's FY2016-17 budget proposal includes the elimination of PERC].
But the Governor’s 2016-17 budget just builds on Gov. Wolf’s actions to unilaterally shut down PERC. In a letter, Gov. Wolf’s chief of staff Mary Isenhour tells PERC to “discontinue operations:”
As you are aware, the General Appropriation Act of2015, the Act of December 29, 2015(P.L. _, No. 10A) (Act 10A), did not contain an appropriation for the Public Employee Retirement Commission (PERC) for Fiscal Year 2015-2016.There are no appropriated funds from which to cover operational expenses, salaries and benefits, or expense reimbursements. As we discussed yesterday, it is necessary for PERC to take all appropriate steps to immediately discontinue operations.
The letter tries to make it sound like the legislature or someone else forgot to fund PERC. But it was Gov. Wolf who vetoed funding for PERC, with little explanation—though it’s pretty clear to all observers the veto was punitive.
PERC was fully funded in the Governor’s 2015-16 budget proposal, and in the “framework budget” the governor was pushing in December. Only after PERC refused to change their analysis at the governor’s request did he decide to eliminate PERC.
Thankfully, this lawsuit and agreement protects taxpayers and allows PERC to continue to provide independent pension analysis regardless of threats from Gov. Wolf.