HARRISBURG – The Senate unanimously approved today legislation sponsored by Senate Finance Committee Chair Mike Brubaker (R-36) that takes a historic first step at addressing Pennsylvania’s pension crisis in an effort to keep the state’s systems sustainable for future generations.
Senate Bill 922 creates a defined contribution plan, or 401(k)-style plan, for elected officials, including current legislators, the Governor, the Attorney General, the Auditor General, and Treasurer upon re-election and the judiciary upon retention. The legislation was recently amended in the Senate Appropriations Committee to remove language requiring new hires of the Public School Employees Retirement System (PSERS) and the State Employees Retirement System (SERS) to enroll in a defined contribution plan.
“The Senate took a significant step today by recognizing that our Commonwealth must begin acting now to address the financial pressures surrounding the underfunded public pension systems. This bill marks the beginning of an important process moving forward – a process that will be ongoing to stop the current debt from growing and to protect taxpayers from this type of liability in the future,” Brubaker said.
Brubaker unveiled Senate Bill 922 last year and the Senate Finance Committee held public hearings on the issue and proposal. His original bill included language altering the future benefits of current employees, placing new hires in a defined contribution plan beginning in 2015, and adjusting the amount the state contributes to the pension plans each year.
According to Brubaker, failure to take any action on this issue only exacerbates the painful cost increases on the state’s overall fiscal climate in the long-run and will very likely cause a further downgrade of Pennsylvania’s credit rating.
“Although I would have ultimately preferred to see more meaningful legislation, the bill proves this body is serious about leading by example. The political reality is this version is what can be moved at this time,” he added. “However, moving forward, we must remain committed to tackling the Commonwealth’s growing $50 billion unfunded liability and the fact that this growing debt will result in higher school property taxes which should be a concern for all Pennsylvanians.”