Source: Doylestown Intelligencer Date: 11/27/2012

Automatic pay raise coming to state lawmakers

By Gary Weckselblatt Staff Writer

State lawmakers will see a bump in their pay beginning Saturday, and many say they aren't happy about it.

"This is why people get disgusted with the whole political arena," said state Rep. Tina Davis, D-141. "We're here to serve them, yet they're suffering and we're getting more money automatically."

State Rep. Tom Murt, R-152, said, "While the economy is still in the tank, as it is, I don't see how legislators in good conscience can accept a pay raise."

The automatic increase -- 2.2 percent this year -- will push the salaries of rank-and-file lawmakers from $82,026 to $83,802.

But the pay boost is not limited to members of the General Assembly.

Gov. Tom Corbett's pay will rise to $187,256 and Supreme Court Chief Justice Ronald D. Castille will make $205,415. Other Supreme Court justices will be paid $199,606.

The president judges of the Superior and Commonwealth courts will make $194,145, while the rest of the judges on the two statewide appellate courts will be paid $188,337. Common Pleas Court judges will make $173,271 and magisterial district judges will make half of that, $86,639.

House Speaker Sam Smith and Senate President Pro Tempore Joe Scarnati each will make $130,820, while 14 members of leadership in each chamber will make $121,418 for the party floor leaders.

The salary doesn't include the tax-free per diems, health benefits and pension they can collect.

State Rep. Marguerite Quinn, R-143, introduced legislation to suspend for one year any automatic COLA (cost of living adjustment) payments for members of the General Assembly. Her House Bill 1380 has 31 co-sponsors, including area lawmakers Davis, Murt, Frank Farry, R-142, Todd Stephens, R-151, and Kathy Watson, R-144.

Her bill, referred to the State Government Committee, never moved. It simply called for a "suspension" of the annual COLA.

"It's a common-sense, measured approach to what's happening out there," Quinn said. "It's simple, straightforward and temporary."

Quinn came up with the plan after back-to-back years of no increases in benefits to Social Security recipients.

Each year, a 1995 state law adjusts the salaries of elected officials to reflect changes over the last 12 months in the Consumer Price Index for Pennsylvania, New Jersey, Delaware and Maryland. Social Security COLAs are based on the national consumer price index.

Quinn contends her bill "is a good tool in a lousy economy."

With the two-year session coming to an end Friday, she is having her legislation redrafted for the next session. Watson said she's glad and she will again support it.

"I know I have a job for two years," she said. "In 2012, not a lot of people can say that. I'm very conscious of that fact."

She said the COLA issue is a matter of timing. If you look at the state as a $27-billion business, she said, "I'm not increasing my salary (in this economy). I'm using the money to keep the business afloat."

State Rep. Scott Petri, R-178, said the COLA issue is fair to discuss, but there are big-ticket items "that are right on our doorstep and we've got to deal with them."

He said the Affordable Care Act is projected to cost the state $2 billion a year, pensions are underfunded by $40 billion and the state owes the federal government $3 billion for unemployment compensation.

"We've got one major problem after another," he said, adding transportation funding to the list. Pay raises, he said, are such a "tiny slice" of the budget.

In 2010, Auditor General Jack Wagner called on Corbett and the General Assembly to initiate a moratorium on that year's COLA, which was 1.7 percent.

On Monday, he said now is "not the appropriate time for elected officials to be getting a pay increase." He called for lawmakers to "pass a piece of legislation that suspends pay increases until the economic situation of the commonwealth improves."

In recent years, a number of lawmakers have donated their COLAs to charity or returned them to the treasury.

Davis and Watson write checks to the treasury. Quinn, Stephens, Murt and Farry give theirs' to charity. So does state Rep. Gene DiGirolamo, R-18.

"I've always thought that instead of giving it back to Harrisburg, it would go to better use to people or groups in my district," he said.

Stephens said he "doesn't judge how anyone else handles it. I just don't feel right accepting a COLA as we're still dealing with these difficult economic times."

The Associated Press contributed to this story.

Gary Weckselblatt: 215-345-3169; email, gweckselblatt@phillyBurbs.com ; Twitter, @gweckselblatt

Source: Doylestown Intelligencer Date: 11/27/2012

It’s time for a name change in Pennsylvania

By Thomas P. Murt

The Pennsylvania Department of Public Welfare (DPW) needs a change. And it starts with something very simple: its name.

Welfare does not describe what the department does or whom it serves. In fact, we are the only state in the country that still has a department called “Public Welfare.” This is why I have introduced a bill that would change the name from the Department of Public Welfare to a name that far better describes what this wing of our state government does: the Department of Human Services.

In Harrisburg, we just witnessed a striking, dangerous example of how lumping vital human services under “welfare” can produce disastrous results. In the interest of “reforming welfare,” DPW proposed installing copayments for families with children who have behavioral, mental or medical health problems. These children are entitled to receive human and health services under Medicaid.

For many families, a recurring copayment for their child with multiple needs would lead to bankruptcy. But as my colleague, Rep. Frank Burns of Somerset County, said after introducing a bill to delay the copayments: “This was sold as something we needed to fight for welfare reform. But this is not the kind of welfare reform they were talking about … these are the unintended consequences you get when you give too much authority to a department.” Indeed, how are we going to truly improve and streamline the real cost-drivers in DPW — like long-term care for our elderly and people with disabilities — if we keep categorizing these services as “welfare reform,” or “waste, fraud and abuse”?

The DPW, working with 67 county governments, is responsible for delivering human services, not welfare.

And just what are these services provided by counties and supported by DPW? If you have a child with an intellectual disability, he or she is entitled to human services from the county. If you have a brother who has schizophrenia or another mental illness, he is entitled to services from the county. If a parent struggles with a powerful substance addiction, he or she is entitled to treatment from the county. If a homeless child needs a place to sleep, a youth in foster care seeks help, or a wife and mother is married to an abuser, counties have to be there to help. Does this sound like welfare?

Ninety-three percent of DPW’s budget is spent on the programs I just mentioned, plus Medicaid support for Pennsylvania children with life-limiting disabilities and our senior citizens requiring long-term nursing care. Again, caring for a grandmother in a nursing home or providing medical help for a child with autism is not what I’d call “welfare.” In fact, since this year’s budget eliminated Cash Assistance, even less than 7 percent of DPW’s budget is now spent on programs that could be considered “welfare.” When 93 percent of a department’s budget is spent on human and health services, why in the world would we still call it “welfare”? The term is simply outdated and not accurate. It’s like calling our Department of Education the Department of Busing.

Changing DPW’s name would more accurately reflect the department’s mission, which is to “promote, improve and sustain the quality of family life, break the cycle of dependency and protect and serve Pennsylvania’s most vulnerable citizens.” Dropping “welfare” is also more in sync with our 67 counties. Not one Pennsylvania county has a department or agency of welfare. A name change could also drive a culture change within the department. Continuing to view the consumers the department serves as merely “welfare recipients” taints the reality of those who need real help. This brings me to my final point.

For me, a name change is mostly about respect. Few Pennsylvanians would ever want to be on welfare. Those on it would prefer a job and respect rather than unemployment and scorn. And those who aren’t on welfare don’t want to be associated with it. Is a grandmother who worked her entire life in a hospital laundry room but now needs long-term care a welfare recipient? Is a family receiving full Medicaid coverage for a severely disabled child a welfare recipient? And what about a close family member who, through no fault of his own, suffers from schizophrenia and requires constant care? Is this a welfare recipient? No.

These are Pennsylvanians who need and deserve our help. Stigmatizing the elderly or disabled is not what good Pennsylvanians do. Over the coming months, I hope to convince the governor, and my colleagues in the General Assembly, to support my bill to get rid of “welfare” and change one of our most vital resources to the Department of Human Services. I hope you join me.

State Rep. Thomas P. Murt serves the 152nd Legislative District, which comprises Upper Moreland and Lower Moreland townships, Hatboro, Bryn Athyn, portions of Upper Dublin Township and the Philmont Heights neighborhood of Northeast Philadelphia.

Source: Harrisburg Patriot News Date: 11/25/2012

Lawmakers should work to improve state stores

Letters to the Editor

I want to thank The Patriot-News for the well-informed editorial focused on common sense measures that lawmakers should embrace to make our wine and spirits shops more convenient for consumers - and more efficient for all taxpayers ("Empty promises: Despite talk, state stores remain status quo," Nov. 9).

The fact is that the Pennsylvania Liquor Control Board is a distribution and retail business that delivers a significant return for all taxpayers - more than $500 million a year in taxes and profit.

Still, more can be done.

Direct shipment of wine to homes, more Sunday stores with expanded hours and flexibility in pricing make good sense for consumers.

In addition, the agency can save significant dollars and raise significantly more revenue for the state if lawmakers would give the PLCB authority to update its procurement practices.

Estimates vary, but these measures and others could generate an additional $75 million annually for the state treasury.

While we obviously disagree with The Patriot-News on its support of efforts to dismantle the system, there should be widespread consensus on making this system as convenient and efficient as possible.

KATHY JELLISON

President

Pennsylvania Social Services Union

Source: Towanda Daily Review Date: 11/27/2012

Baker applauds $45,233 in grants for company job training

FOR THE REVIEW)

In an effort to help boost employment opportunities in manufacturing and technology-based businesses, the Workforce and Economic Development Network of Pennsylvania (WEDnetPA) has awarded five companies in the 68th Legislative District a total of $45,233 to assist with job training needs, Rep. Matt Baker (R-Bradford/Tioga) announced.

"This funding will help companies train employees for advanced positions in their business," said Baker. "Here in the northeast, we have a growth of manufacturing companies due to the natural gas industry and this funding will help ensure that our local workers are trained to become more efficient and better qualified, which ultimately helps with job retention and providing higher wage opportunities for workers."

Specifically, the WEDnetPA grants help companies provide employees with a higher level of training in the areas of basic skills and information technology than their training budgets might otherwise allow.

Area companies are receiving the following WEDnetPA grant funding for the 2012-13 fiscal year:

AES Armenia Mountain Wind - $3,968

Hitachi Metals Automotive Components - $11,700

Hitachi Metals Automotive Components USA, LLC - $7,000

Troy Community Hospital - $5,765

Ward Manufacturing - $16,800

Baker noted that in the 2011-12 fiscal year WEDnetPA provided $42,859 in total grants to six companies in the district. On average, companies provide a four-to-one match for every WEDnetPA dollar invested in training.

The following companies received grant funding in the 2011-12 fiscal year:

Citizens and Northern Corporation - $20,248

Truck-Lite Co., LLC - Wellsboro - $2,285

Osrama Sylvania Inc. - $9,445

Troy Community Hospital - $6,052

Land Services Group/Cunningham Surveyors - $2,550

Select Energy Services, LLC - Mansfield - $2,276

"By investing in the great Pennsylvania workers we currently have, we can sculpt a better workforce without having to employ people outside the state," said Baker. "Our economic recovery relies largely on improving our existing business climate and placing local people in family-sustaining jobs, and these types of business grants help achieve those goals."

Since its inception in 1999, WEDnetPA has invested in more than 16,000 companies across Pennsylvania and helped train nearly one million workers.

Submitted by Rep. Matt Baker

Source: Towanda Daily Review Date: 11/27/2012

Pickett says local communities to receive grants for recycling

FOR THE REVIEW)

Three local governments will benefit from state grant funding through the Commonwealth's Recycling Performance Grant Program, Rep. Tina Pickett (R-Bradford/Sullivan/Susquehanna) said.

"Recycling is a bustling business in Pennsylvania," Pickett said. "Not only does recycling help reduce the waste in landfills but it also creates jobs and market expansion. It is gratifying to see so many people and businesses recycling, which has so many ecological and economic benefits."

Susquehanna County will use its $23,501 grant as a 50 percent reimbursement of the county recycling coordinator's salary and expenses.

In addition, Towanda Borough has been awarded $1,475 and Dushore Borough has been granted $408 to help with their recycling programs. The grant amounts are based on the amount of recycling within the municipality during the 2010 calendar year. Population is also a factor in the amount of the grants.

The grant program, administered by the state Department of Environmental Protection (DEP), is designed as incentives to help Pennsylvania communities increase the amount of material being recycled. These grants are in addition to those offered by DEP to establish and maintain recycling programs.

Submitted by Rep. Tina Pickett.

Source: Associated Press (AP) Date: 11/26/2012

Prosecutors urge two years in prison for ex-Sen. Mellow.

SCRANTON, Pa. (AP, Nov. 26) — Federal prosecutors said Monday former state Senate Democratic leader Bob Mellow should be sentenced to two years in prison for public corruption, while his lawyers argued for probation only.

A prosecution sentencing memorandum said Mellow's actions, which they outlined in detail, compared to those of other state legislative leaders who received multiyear sentences for similar crimes. He is due to be sentenced Friday after pleading guilty to a single count of conspiracy to commit mail fraud.

"When a powerful and influential lawmaker breaks the law and abuses the public trust, the best way to promote respect for the law is to significantly punish the lawmaker by imposing a substantial prison sentence," federal prosecutors wrote.

Mellow's defense lawyers argued that his background and status as a first-time offender would justify a sentence of probation.

"Mr. Mellow is extremely remorseful and does not need incarceration to be deterred from future criminal conduct," his lawyers wrote. "Moreover, the irreparable harm to Mr. Mellow's reputation and good name and the loss of his substantial state pension already constitute substantial punishment."

Mellow, 69, retired in 2010 after a four-decade Senate career.

Prosecutors said his staff worked on state time on a range of political campaign activities in 2006.

They called him "a lawmaker who broke the law; an elected leader with power and influence who abused that power and influence; a legislative leader who placed his own political ambitions above the public's trust."

They argued that a 24-month term would be in line with sentences imposed on other former lawmakers who have been convicted of misusing their office, including Vince Fumo, John Perzel, Bill DeWeese, Mike Veon and Jane Orie.

"Like all of these other state legislators, Mellow abused the public trust by misusing legislative staff and resources for political campaign and fundraising work," prosecutors wrote.

They also are seeking $80,000 in restitution.

Mellow's defense attorney, Sal Cognetti, declined comment beyond what was in the defense sentencing memorandum.

Source: Scranton Times Tribune Date: 11/27/2012

Mellow lawyers say he should get no jail time

BY BORYS KRAWCZENIUK (STAFF WRITER)

Mellow makes case for probation

Former state Senate Democratic Leader Robert J. Mellow should be sentenced to serve probation with no prison time as punishment for conspiring to defraud taxpayers by using Senate staff for political work and understating income on a tax return, his lawyers argue in a court document.

Read the document HERE

The senator "is a contrite, well-educated individual with a 40-year record of distinguished public service and no criminal history," who is unlikely to repeat his crime and "is extremely remorseful," making incarceration unnecessary, Mr. Mellow's lawyers wrote.

The memo was submitted shortly after federal prosecutors submitted their own, calling on a judge to sentence Mr. Mellow to two years in prison. A sentencing hearing is set for Friday morning in U.S. District Court in Scranton. The memo was submitted by attorneys Sal Cognetti Jr., Daniel T. Brier, Patrick A. Casey and Donna A. Walsh.

Mr. Mellow pleaded guilty in May to conspiracy to commit mail fraud by using Senate staff to do political work and to file a false tax return that understated how much money he made when he sold the building that housed his Senate office in the a Peckville section of Blakely. That understatement cost taxpayers more than $16,000 more. Mr. Mellow has already paid the Internal Revenue Service $31,748 in tax, penalties and interest.

The defense memo touts Mr. Mellow's career as a senator who enjoyed wide support from voters, "was widely recognized as one of the hardest working," and was "an extraordinarily effective representative of the citizens of Northeastern Pennsylvania."

His lawyers note legislative achievements that include allowing television cameras to broadcast Senate sessions live, helping create the Children's Health Insurance Program, cutting school property taxes through legalized gambling and leading the establishment of the Commonwealth Medical College in Scranton.

They cite "nearly 200 letters" that show he "has led a life marked by exceptional kindness, generosity, loyalty and friendship in his private dealings as well as his public life."

"As the character letters make abundantly clear, Mr. Mellow is a devoted father, grandfather, brother and uncle. He is a man of deep faith who regularly attends church," the memo says.

The lawyers argue Mr. Mellow is 69 years old and in poor health, so jailing him would only worsen his condition. The condition has not been publicly specified.

They also argue that Mr. Mellow's disabled 39-year-old adopted daughter, Missy, "will personally suffer and her medical condition will deteriorate if she is separated from her father" and that he has suffered substantially because he has lost his Senate pension and his "reputation and good name."

"Mr. Mellow demonstrated great strength of character in admitting and accepting responsibility for his misdeeds," the lawyers wrote. "He has expressed significant remorse for his errors. His sincere remorse and otherwise good character set Mr. Mellow apart from run-of-the-mill offenders" and justify probation.

Contact the writer: bkrawczeniuk@ timesshamrock.com

Source: Wilkes-Barre Citizens Voice Date: 11/27/2012

Lawyers spar over Musto's well-being

By Dave JanoskiProjects Editor)

The defense and prosecution in the Raphael J. Musto bribery case filed dueling arguments with the U.S. Third Circuit Court of Appeals last week on the issue of whether the court should hear a pre-trial appeal centering on the former state senator's health.

Attorneys for the 83-year-old Pittston Township Democrat maintain that liver disease and other ailments render him unable to help prepare his defense and would make a trial life-threatening. They sought dismissal of the charges or an indefinite trial delay.

U.S. District Judge A. Richard Caputo, who would preside over the trial, rejected those arguments last month after granting numerous health-related delays, but allowed Musto's attorney to appeal to a higher court.

The Third Circuit asked the defense and prosecution to present arguments over whether it should hear the case now rather than waiting, as is customary, until after a trial has been held.

In a letter to the Third Circuit, the defense argued that Musto's rights would be "significantly undermined" if it did not hear his appeal.

"By the time a trial was concluded, Musto would have already undergone the rigors of preparing for trial and the rigors of the trial itself, thereby being subjected to the life-threatening complications" that doctors say he would suffer, according to the defense.

"These complications are the harm he seeks to avoid and which cannot be undone by an acquittal or by a post-conviction appeal."

But in its filing, the U.S. Attorney's Office called the appeal "premature."

"If Musto's health curtails him from adequately preparing for and attending trial and the result is a conviction, he may seek to have that conviction overturned on appeal post-judgment. As such, at this time he presents this court with no issue that must be addressed immediately."

Musto is accused of accepting $39,000 in free services and cash for supporting state funding for three projects.

He has been free on his own recognizance since his indictment in November 2010 shortly before his previously announced retirement.

djanoski@citizensvoice.com, 570-301-2178

Source: Towanda Daily Review Date: 11/27/2012

Grant awarded to Sunfish Pond

BY ERIC HRIN (Staff Writer)

LEROY TWP. - All was quiet at Sunfish Pond Monday, but big plans are in the works for the popular county park.

On Monday, State Senator Gene Yaw (R-23) announced several Community Conservation Partnerships Program (CCPP) grants to be awarded throughout his Senatorial District., and $79,000 from Key 93 has been set aside for the further development of Sunfish Pond County Park in Leroy Township.

Yaw said this will include construction of a boat dock, boardwalk/observation deck, pedestrian walkways, pavilion, parking area, storm water management measures, installation of play equipment with required safety surfacing, ADA access, landscaping, signage and other related site improvements.

Also for Bradford County, Yaw announced that $10,000 from Key 93 was designated to hire a peer consultant to develop a long-term maintenance and operations plan, evaluate the potential for revenue producing facilities and programs, and develop an organizational structure for staff and volunteers for a county recreation and parks department.

The CCPP is administered by the Department of Conservation and Natural Resources (DCNR) and includes the Keystone Recreation, Park and Conservation Fund (Key 93), the Environmental Stewardship Fund (Growing Greener 1) and federal funding sources.

"I am pleased that these investments have been made in my senatorial district," Yaw said in a news release.

"This funding will assist with the completion of park and other land and water conservation projects. Even more importantly, these dollars will generate additional revenues through increased economic, tourism and recreational activities in the Northern Tier."

Eric Hrin can be reached at (570) 297-5251; email: reviewtroy@thedailyreview.com.

Source: Bloomberg News Date: 11/27/2012

Pennsylvania Confronts $41 Billion in Pension Deficits

By Romy Varghese

Pennsylvania ’s two public pensions face a combined shortfall of $41 billion, and their costs will consume 62 percent of fiscal 2014 revenue growth, according to a report from the state budget office.

The State Employees’ Retirement System has 65 percent of assets needed to cover projected liabilities, and the Pennsylvania Public School Employees’ Retirement System is 69 percent funded, the report said. The plans cover 817,000 people.

In July, Moody’s Investors Service cut the state’s general- obligation debt rating to Aa2, its third-highest, citing rising pension obligations that will weigh on its economic recovery. Funding for state retirement plans across the U.S. fell in fiscal 2011 for a fourth straight year, to a median coverage ratio of about 72 percent, data compiled by Bloomberg show.

“Absent meaningful structural pension reform, the state’s general-fund budget is on a very predictable path that will force a choice between either fully funding pension obligations or making cuts to the core functions of government,” Charles Zogby, Pennsylvania’s budget secretary, said in a statement.

State revenue is projected to rise by about $818.7 million in fiscal 2014, according to the report. Pension cost increases, estimated at $511.2 million, will account for almost two-thirds of the additional revenue, the report shows.

Narrowed Premium

The yield premium for holders of 10-year general-obligation bonds issued in Pennsylvania has narrowed by 0.11 percentage point since Governor Tom Corbett took office, data compiled by Bloomberg show. An index of 10-year debt yields 2.09 percent on average, or 33 basis points more than a gauge of top-rated state and local securities. A basis point is 0.01 percentage point.

The extra yield was 44 basis points on Jan. 18, 2011, when Corbett was sworn in. Yield premiums have declined on state and municipal debt partly because investors have bought tax-free bonds as a hedge against higher taxes.

Corbett intends to propose a pension overhaul in his 2014 spending plan, for the year that begins in July, according to the report. Retirees and current employees with accrued benefits won’t be affected, it said. Steps taken by other states, such as increasing worker contributions, raising the retirement age and adjusting payment formulas such as credit for years of service, provide potential models for Pennsylvania.

To contact the reporter on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

Source: Associated Press (AP) Date: 11/27/2012

Report warns of looming Pennsylvania pension shortfall

Corbett's budget office says higher taxes 'should be off the table,' but cuts in prospective benefits for current employees should be considered.

By Mark Scolforo, Of The Associated Press

HARRISBURG — A report issued Monday by Gov. Tom Corbett 's administration warned of higher taxes, program cuts, lower business growth and steeper borrowing costs because of the state's financial obligations toward the two large public-sector pension plans.

The budget office report said the State Employees' Retirement System (SERS) and the Public School Employees' Retirement System (PSERS) together have an unfunded liability of $41 billion.

Growing pension costs could force spending cuts throughout the state budget, according to the report, a scenario made even worse by projections of higher spending on debt, medical assistance and prisons.

"Like an oncoming tidal wave, pension costs threaten to overwhelm the general fund budget and the vital programs and services that it funds," the report says. The same dynamic is expected for public schools, said the report, which was published by Corbett's budget office.

"Increasing pension contribution obligations will claim a greater and greater share of school district budgets, crowding out funding for education — whether it is direct classroom instruction, sports, facilities and maintenance — and ultimately put pressure on districts to increase property taxes," the budget office said.

The report says higher taxes "should be off the table," but reductions in prospective benefits for current employees should be considered.

Corbett, a Republican, has spoken repeatedly about his desire to address the problem, which is a particular challenge because case law interpreting the state constitution has prevented curtailing pension benefits for current or retired state employees and teachers.

His office's report says, without elaboration, that the state can change components of current employees' prospective benefits "to conform with prior court determinations regarding deferred compensation."

It recounts how the problem began with the 2001 law that granted retroactive pension rate increases to state workers and teachers, including even higher increases for the lawmakers.

That was followed by a cost-of-living increase for retirees, and then by restructuring the state's contributions that delayed the true cost for another decade.

The pension systems' investments were badly hammered when the technology and housing bubbles burst, and they have struggled to recover. A 2010 law made some structural changes, including less generous benefits for new hires.

The state paid nearly $1.1 billion into SERS and PSERS during the fiscal year that ended in June. That figure is projected to exceed $2.2 billion next year and reach $5.1 billion by 2019.

SERS provides $2.7 billion annually in benefits, while PSERS pays out $5.3 billion. About 815,000 people are members, a group that includes active employees, retirees, beneficiaries and others who are vested but inactive.

Messages seeking comment weren't immediately returned by spokesmen for the two funds, and for the office of Budget Secretary Charles Zogby.

Source: Philadelphia Inquirer Date: 11/27/2012

Corbett: Pennsylvania must reform public pensions or face budget crisis

Angela Couloumbis, Inquirer Harrisburg Bureau

HARRISBURG - Signaling the importance of pension changes in the coming months, the Corbett administration released a detailed report Monday warning of steep budget cuts if a way is not found swiftly to rein in public-pension spending.

The 19-page report labeled Pennsylvania's pension funding problems a crisis, saying it had been created by a combination of generous enhancements over the last decade to member and retiree benefits, lackluster investment returns, and nearly a decade of underfunding by state government and local school districts.

The result: The state's two public pension plans, for state employees and public school workers, have an unfunded liability of $41 billion. What's more, pension cost increases in the next few years will skyrocket, threatening to gobble most of any additional revenue coming into state coffers and leading to steep cuts and even steeper property tax increases.

"Absent meaningful structural pension reform, the state's General Fund budget is on a very predictable path that will force a choice between either fully funding pension obligations or making cuts to the core functions of government," Budget Secretary Charles B. Zogby said in a statement. "It is imperative that Pennsylvania find a workable solution."

In the current budget, the state's pension contributions are projected to hit $1.6 billion. In the coming fiscal year, that number will rise to just over $2.2 billion, a 45 percent increase. It will more than double to $5.1 billion by 2019-20 fiscal year, according to the report.

Corbett has said he will unveil his pension reform plan when he presents his budget in February.

Although the governor has given few specifics, his administration has indicated it was toying with a plan that would enroll all new state workers in 401(k)-style plans that would require larger employee contributions.

The report notes that Corbett pledged, when running for governor, not to raise taxes, so tax increases should be "off the table."

The report also indicates that former public and school district employees will not be affected by any of the changes, and that accrued retirement benefits of current employees should not be touched.

The report said Pennsylvania will consider other options, such as increasing the retirement age by two to three years; changing how the basic pension formula is calculated; eliminating overtime pay in pension calculations; and capping the retirement benefit.

The full report is available for download at www.budget.state.pa.us

Contact Angela Couloumbis at 717-787-5934 or acouloumbis@phillynews.com, or follow on Twitter @AngelasInk.

Source: Pittsburgh Post Gazette Date: 11/27/2012

Corbett sets stage for debate on pensions

By Karen Langley / Post-Gazette Harrisburg Bureau

HARRISBURG -- Faced with a $41 billion unfunded pension liability, the Corbett administration Monday set the stage for negotiations on overhauling the state's retirement systems with a report suggesting current employees could face cuts in benefits they have not yet accrued.

The imbalance between the liabilities and assets of the two state pension systems -- one for state employees and the other for public school employees -- gives them a combined funding ratio of just under 68 percent, well below the 80 percent that is considered healthy, according to the report released Monday by the state Office of the Budget. Gov. Tom Corbett has spoken of the urgency of overhauling the retirement systems, and the report says he intends to address pensions as part of his budget proposal for the upcoming fiscal year, which begins July 1.

The report lists several basic positions the administration will bring to pension overhaul: no tax increases, no loss to retirees, no change to benefits already earned by current employees. But the administration makes no such promise about the future earnings of current employees.

"Given the current state of both pension systems, it may be necessary to explore changes to prospective benefits for all current public and school district employees," the report says.

Rep. Glen Grell, R-Cumberland, was among a group of lawmakers who put together a 2010 pension overhaul law that made changes, like an increased retirement age, for new hires. He said limiting additional changes to future employees cannot resolve the system's imbalance.

"If all you're going to do is put another new plan in effect for new employees, that would have a very minimal, if any, effect on the unfunded liability," Mr. Grell said. "There has to be something more substantial -- either in the form of benefits or contributions or other revenues -- if you're going to have an effect on the unfunded liability."

Any move to tweak benefits for current workers is sure to hit resistance from labor unions. David Fillman -- executive director of the statewide council of the American Federation of State, County and Municipal Employees -- said Pennsylvania court decisions prevent the state from changing retirement terms for current workers.

"Everybody knows there's not really much we can do with the current employees," Mr. Fillman said. He said the state should consider increases to revenue as it looks to pay its pension and education bills.

Rep. Joe Markosek of Monroeville, the ranking Democrat on the Appropriations Committee, likewise said current workers are immune from benefits changes.

"Pennsylvania case law prohibits benefits changes for existing employees," he said in a written response to questions. "Remember, public employees have consistently fulfilled their contractual obligation by contributing 100 percent of their share toward the pension system."

The report said Pennsylvania could consider pension approaches taken by other states, including increasing employee contributions, raising the retirement age and changing how the retirement benefit is calculated.

Karen Langley: klangley@post-gazette.com or 1-717-787-2141.

Source: Harrisburg Patriot News Date: 11/27/2012

Officials looking to other states to fix Pennsylvania's pension problem

By JAN MURPHY, The Patriot-News

Think of “Pac-Man” gobbling up the little yellow dots as it moves through the maze.

That’s not too far from Gov. Tom Corbett’s description of the pension crisis that the state faces.

The soaring pensions costs are consuming billions in state revenue. The state’s obligations to its two public employee pension funds are eating up money that otherwise could go to fund schools, public safety, transportation, human services and other core governmental programs.

The Keystone Pension Report offers a framework on how the penion plans could be reformed to make them more affordable.Christine Baker, The Patriot-News/file

To help Pennsylvanians understand the magnitude of the problem, Corbett’s budget office on Monday issued the Keystone Pension Report.

It also explains how the problem was created: benefit enhancements in 2001, a decade of underfunding by the state and school districts and less-than-expected investment returns.

Combined, this left both pension programs less than 68 percent funded. A healthy pension program is about 80 percent funded.

The report offers a framework for how the pension plans could be reformed to make them more affordable while sustainable by pointing out approaches other states have considered or adopted.

These include increasing the employee contribution; raising the retirement age by two to three years; and changing the pension formula calculations, including capping benefits and altering the method used to determine pension benefits.

This fiscal year, the report notes the commonwealth is contributing just over $1.5 billion to the State Employees’ Retirement System and the Public School Employees’ Retirement System. Absent reforms, those costs will rise by $511.3 million.

The state is expecting revenue growth of $818.7 million in the 2012-13 fiscal year, but 62 percent of it will be swallowed up by the rising pension costs.

“The state’s general fund budget is on a very predictable path that will force a choice between either fully funding pension obligations or making cuts to the core functions of government,” Budget Secretary Charles Zogby said. “With a clear understanding of the crisis and the challenges we confront, it is imperative that Pennsylvania find a workable solution.”

Corbett and legislative leaders have identified pension reform as one of the highest priorities for the 2013-14 legislative session. To date, though, none have offered a specific plan to deal with the cost of pension benefits as well as the $41 billion in unfunded liability for future retirement benefits to be paid.

State Rep. Glen Grell, R-Hampden Township, calls the budget office’s report an important first step to show the budget office and governor’s office have a grip on the problem.

But Grell, whom the House Republicans have dubbed as their go-to guy on pension reform, said, “it clearly isn’t a solution or a road map to a solution.”

The state and school employees’ pension systems offer defined benefit plans. These plans require employee contributions and provide guaranteed specific dollar-value benefits upon retirement. The investment risk rests predominantly with the employer.

Many private companies have switched to defined contribution plans, such as 401(k)-type plans. In these plans, employers contribute a predetermined amount to supplement the employee contribution. The investment risk rests with the employees.

To help fix the problem, Senate Republican leaders plan to reintroduce legislation to move new state and school employees to a defined contribution plan after the new legislative session starts in January. The plan didn’t gain traction this year.

Richard Dreyfuss, a senior fellow to the conservative-leaning Commonwealth Foundation in Harrisburg, is urging policymakers to also look at altering the unearned benefits provided through the defined benefit plan for current employees.

He said it’s critical to find the money to deal with the pension systems’ unfunded liability so the burden is not passed on to future generations.

“I think a lot of this is driven by the budget challenges of next year,” Dreyfuss said. “We’re already underfunding these plans significantly.”

David Fillman, executive director of the American Federation of State, County and Municipal Employees Council 13, said the report brushes over the fact that employees have been contributing to the pension system all along. And he said there have been years when the state and school districts contributed little or nothing.

The report also ignores the lack of providing cost-of-living adjustments to retirees for the past decade, Fillman said.

He said he hopes that policy-makers will “bring everybody to the table to talk about where we go instead of trying to jam something down everybody’s throat.”

Zogby said he hopes all parties begin working together to institute meaningful reform while keeping the taxpayer in mind.

“We must keep the taxpayer top of mind and not harm current and past employees,” Zogby said. “We will not touch accrued benefits, nor will we allow the pension problem to continue for future generations. We need to fix this problem for the future stability of both the pension systems and the commonwealth’s budget.”

Source: Pittsburgh Tribune Review Date: 11/27/2012

Pennsylvania pension report gets cool reception

By Debra Erdley

A Corbett administration report on Pennsylvania’s $41 billion unfunded public pension bill warns of higher taxes, program cuts, lower business growth and steeper borrowing costs but falls short of offering specific solutions, experts said.

The report from Budget Secretary Charles Zogby hints of solutions Gov. Tom Corbett might recommend on the issue he calls a priority for 2013, including reducing prospective benefits for employees.

“Increasing pension contribution obligations will claim a greater and greater share of school district budgets, crowding out funding for education, whether it is direct classroom instruction, sports, facilities and maintenance, and ultimately put pressure on districts to increase property taxes,” the Budget Office said.

Budget Office spokesman Jay Pagni said the administration is working with a panel of experts to finalize a proposal that might take pieces of changes other states made as they wrestled with public pension issues.

Other states increased employee contributions, raised the retirement age, changed pension calculations and adopted defined contribution programs. Those actions wouldn’t necessarily address Pennsylvania’s liability problem, said Rick Dreyfuss, a retired actuary and senior fellow with the Manhattan Institute and the Commonwealth Foundation.

“All of these prospective changes affect ongoing costs of the plan, but our problem is the accrued costs,” Dreyfuss said.

State and school employees’ pensions are funded through a combination of investment earnings from the pension funds, employee contributions and taxpayer contributions.

Corbett has likened the growing taxpayer tab for pensions — $1.5 billion this year, $2.2 billion in 2013-14 and $5.16 billion in 2019-20 — to a Pac-Man devouring the state’s ability to provide basic services.

Dreyfuss said the only way to reduce the unfunded liability is to dramatically increase those payments.

Bradley Belt, senior managing director of the Milken Institute and former executive director of the federal Pension Benefit Guaranty Corp., questioned whether any plan could address unfunded liability without adding taxes or severely cutting services to cover pension contributions.

“I think it is fine that the budget secretary said there will be no harm to taxpayers, current retirees or benefits already earned. ... Maybe he believes in the Tooth Fairy, but at the end of the day there is a hole that needs to be filled, and the question is, how do you fill that hole?” Belt said.

“Do taxpayers end up picking up the tab, or do you cut back on services? Then you don’t have textbooks in schools, you close libraries, you lay off teachers and firefighters, and you don’t fix the holes in the road,” Belt said.

Zogby emphasized that taxpayers and retirees wouldn’t be hurt.

“The taxpayers did not create this problem, nor did commonwealth or school district employees,” he said. “We will not touch accrued benefits, nor will we allow the pension problem to continue for future generations.”

Senate Majority Whip Pat Browne, R-Allentown, said the Budget Office report documents the causes of the problem and establishes a framework.

“What you do is establish a reform package that ensures it does not replicate the problems of the past,” Browne said.

Browne said shortfalls in anticipated investment returns account for 50 percent of the unfunded liability. Although courts typically have held that benefits cannot be adjusted for active employees, Browne noted that several states changed the basis for future benefits while protecting those earned.

“Whether we can adjust prospective benefits will be part of our discussion,” he predicted.

In the Republican-controlled House, some lawmakers want to see specifics from the governor’s office, rather than a framework for debate.

“We are looking forward to the governor’s concrete proposals on needed changes and we will take a thorough look at that proposal when it is put on the table,” said House Majority Leader Mike Turzai, R-Bradford Woods.

The Associated Press contributed to this report. Debra Erdley is a staff writer for Trib Total Media. She can be reached at 412-320-7996 or derdley@tribweb.com .

Source: Pottstown Mercury Date: 11/27/2012

Charter school funding reform must address pension flaw

We can think of several reasons why laws regulating charter schools should be examined and addressed by Pennsylvania lawmakers after they failed to accomplish that task this legislative session.

Among the most pressing reason is the need to address excess pension contributions.

As explained in a recent news article by the Pa. Independent, charter schools get excess pension contributions because the current funding formulas provide contributions both through public school allocations and a state reimbursement.

Public school districts fund charters through a by-district tuition rate, which includes calculations for pension contributions. On top of that, charters are eligible for pension contribution reimbursements from the state at the same rate school districts receive.

A special audit released by Auditor General Jack Wagner in June said that eliminating this situation could save $500 per student annually, or around $50 million, Pa. Independent reported.

Larry Jones, president of the Pennsylvania Coalition of Public Charter Schools, told Pa. Independent that charter school advocates acknowledge the funding formula is “not perfect on both sides of things.” Charters, for example, don’t have the same bond provisions as school districts, he said.

Addressing the pension issue should come with a greater discussion about the funding formula in general, Jones said.

Steve Robinson, director of public relations for the Pennsylvania School Boards Association told Pa. Indepedent that districts would like to see pension contributions removed from the tuition rate formula.

Doing so could save $500 million by the 2016-2017 school year, he said.

“Any effort to correct funding flaws, any effort to get the tuition payments to be more fair and equitable certainly is going to help districts out, because they won’t be overpaying for what they should be for the charter costs,” Robinson said.

The other side of the double contribution — the state’s reimbursements for employee benefits to charter schools — is calculated the same way as it is for school districts, said Tim Eller, spokesman for the Department of Education. The contribution applies to a portion of their pension costs for PSERS.

Battles over charter school funding have been going on for at least the last decade. “Every time it blows up,” said one legislative observer.

Pressure to reform how the state and school districts fund charter schools will be back when lawmakers take their seats in January. Gov. Tom Corbett is likely to push charter school reform as a priority for 2013, as he did this year.

Corbett also has pension funding reform high on his list of tough jobs to be tackled in the next legislative session.

Here’s a place where the two come together. In the current fiscal environment of school districts faced with exploding pension costs, the notion that charter schools are getting a double-dip advantage is unthinkable.

Legislators should address charter school funding reform in the new year for a number of reasons.

Correcting the flaw in pension contributions heads the list.

Source: Associated Press (AP) Date: 11/27/2012

Persuading Pennsylvania lawmakers a difficult job, Gov. Tom Corbett says

By Marc Levy, Of The Associated Press

HARRISBURG — Gov. Tom Corbett said Monday that getting his fellow Republicans in the Legislature to agree on something is perhaps one of the most difficult jobs he's ever had to do.

Corbett made the comments as he heads into his third year as governor and confronts major issues that are pressing on Pennsylvanians, including boosting transportation funding and scaling back public pension costs.

The Republican governor suggested during an appearance on KDKA-AM radio in Pittsburgh that Republican harmony is no small task after conservative show host Marty Griffin told Corbett that the "knock on you" is that Corbett hasn't advanced key bills despite sharing power with a Republican-controlled Legislature.

"Just as there is a broad spectrum of Democrats from conservative Democrats to very liberal Democrats, so too does the Republican Party in the House and in the Senate here in Pennsylvania have moderate to liberal Republicans to conservative Republicans, and getting them all on the same page, working in the same direction is probably the most difficult job I've ever had to do," Corbett said.

Corbett will have fewer Republicans to win over: The Senate's Republican majority is shrinking to 27 to 23, down from 30 to 20 after three victories in races for open seats by Democrats. In his first two years, a few of his top priorities were achieved with solid Democratic support, including a tax break for a proposed petrochemical refinery in western Pennsylvania that could become the state's biggest financial incentive ever.

Most of his priorities that passed were achieved with little or no support from Democrats, including his first two budgets, a law updating state regulation of the booming natural gas drilling industry and a photo identification law for voters.

Corbett also must make decisions for Pennsylvania under the national health care law that President Barack Obama championed, the Affordable Care Act.

Under the law, Corbett must decide soon whether to run an online health insurance exchange and whether to seek an expansion of income eligibility for the poorest Pennsylvanians under the federal-state medical care program called Medicaid.

On Monday, he did not give an idea of which direction he would take, but he redoubled his criticism of the law, saying it will be costly for taxpayers and hurt the economy, business people and the middle class.

"This is the unaffordable health care act," Corbett said.

A couple of key efforts backed by Corbett failed. Those include privatizing the state-controlled liquor store system and making it easier for privately run, publicly funded charter schools to open in Pennsylvania.

Source: Harrisburg Patriot News Date: 11/23/2012

Op-ed: Why privatize the Pennsylvania lottery?

By Dave Fillman • Simple math dictates that most people who play the Pennsylvania Lottery on any given day do not cash a winning ticket. There’s a reason it is called gambling, after all, and the lottery — just like casinos — isn’t in the business of giving away money.

But the math driving our lottery isn’t all bad and to a certain extent every Pennsylvanian “wins” each time a ticket is sold and that same math begs an important question: Why is Gov. Corbett fast-tracking a secretive plan to dismantle this asset and outsource its management to the private sector? The administration announced this week that Camelot, a firm based in the United Kingdom, has “won” the bidding war and could take over our lottery by Dec. 31. Consider that lottery sales went up by 8.5 percent last year — a record. Net revenue last year was $1.06 billion — that’s $100 million more than the previous year and also a record. There can be no argument that the lottery is working better than ever as a publicly owned asset managed by public employees. So, why privatize? The lottery continues to help seniors in every corner of the state, and it helps every single taxpayer as well, whether or not they ever buy a ticket. Our lottery is the only one in the nation that earmarks all profits for programs for seniors. The lottery helps pay for prescription drugs, transportation, senior centers, long-term care and property tax rebates, to name just a few benefits. The state has tapped the lottery fund to supplement Medicaid nursing home funding. In the current state budget, a record $309 million will be moved from the lottery to help underwrite this vital care while helping to plug a hole that taxpayers might otherwise be on the hook for. Every dollar that goes to the private operator comes out of these programs. That just doesn’t make sense. Again, why privatize? The deal with Camelot clears the way for online gambling, keno and other games. Under current law, however, the lottery can expand as needed to drive up revenue. If the private side can start keno and start online games without the Legislature having anything to say about it, then the administration should be able to go the same route with the current lottery management.

If the goal is to expand dramatically gambling in Pennsylvania, then so be it. The point is you do not have to give a blank check to a private operator to do that. So, why privatize? The process says a lot about this entire proposal and voters need to understand what is going on. Lawmakers in both parties have complained publicly that they do not have enough information about the proposed deal that is being cut or the potential impact on senior programs. The administration won’t say what companies are lining up to get into the action. The administration maintains that it can make this sweeping change without seeking approval from the Legislature and, right now, it appears that there will be no legislative oversight at all — not even a hearing.

We’ve heard nothing at all from the administration about holding public hearings or providing any opportunity whatsoever for taxpayers or seniors to express concerns or raise questions. Why the secrecy? Pennsylvania is not the first state to go down this path and the result in Illinois, a leader in this latest privatization push, is grappling with a legal nightmare. According to The Chicago Tribune, Northstar Lottery Group, the company that was hired to take over that state’s lottery, could owe Illinois taxpayers $28 million to $36 million in penalties for underperformance. Illinois and the company are headed to a costly and time-consuming arbitration process to try and clean the mess up. Gov. Corbett and his administration owe it to our seniors and every taxpayer in the state to open the doors and involve lawmakers and citizens in this process. There is no good reason for the secrecy and the rush to judgment. This deal might be wonderful for the private firm who pulls the winning ticket, but if it cannot stand up to public scrutiny then odds are good that the deal will stink for Pennsylvanians. • Dave Fillman is executive director of AFSCME Council 13. •

Source: Harrisburg Patriot News Date: 11/27/2012

Camelot? Hardly: There are too many questions with Gov. Corbett's lottery proposal

By Patriot-News Editorial Board

Privatizing the state’s lottery might be the right move, but the way the Corbett administration is going about it is not. Pennsylvania is already down to one bidder: Camelot Global Services, which runs the lottery in the United Kingdom.

Any student of business 101 knows that it’s hard to have negotiating leverage with just one company, especially because no other firms submitted final bids. Only two other states have privatized their lottery systems: Illinois and Indiana. Illinois is a case of what not to do.

It went private in 2010, and the operator has fallen short of the grand revenue projections it made. Currently, the operator has dragged the state to court in an effort to change the contract terms.

The Corbett administration has shown no indication that it has learned from the mistakes in Illinois. Indiana selected a private firm to run its lottery in October. Much like Pennsylvania, the Hoosier State was looking for a solid revenue stream.

But there’s one big difference between Indiana and the Keystone State: The Indiana lottery has had lackluster returns for a while. Pennsylvania, in contrast, has arguably the best-run lottery in the country with improving sales and profits year after year, including more than $1 billion netted for the state last year.

Another red flag is that the Corbett administration wants this deal done without hearings on the issue.

It seems odd timing to be doing this with a lame-duck attorney general and no Legislature in session. Furthermore, the state is being advised by highly paid consultants. It’s striking that if the state moves forward with privatization, financial adviser Greenhill and Co. will make $3 million more.

That’s a highly perverse incentive in place for consultants to push for privatization, even if it’s not in the best interests of Pennsylvania citizens. This newspaper has been a gung-ho supporter of liquor store privatization.

Pennsylvania and Utah are the only two states left with such an archaic alcohol sales system. Customer service would almost certainly improve under a private model. But the state lottery is not in the same boat as liquor stores.

Few other states have privatized it, and it’s hard to argue that gambling is not convenient at the moment with all of Pennsylvania’s gaming and lottery options. The linchpin of Corbett’s lotto deal is expanding keno and possibly doing online games. This state has been careful since it legalized gambling in 2004 to monitor it.

The state police and Gaming Control Board have really stepped up. Now the Corbett administration wants to put keno in clubs and bars across the Keystone State.

First, the state could do this on its own without privatizing the manager. Second, this is a sea change in how carefully managed Pennsylvania gaming has been.

Suddenly, we’re going to throw things wide open? There are a lot of questions unanswered.

The privatization Gov. Tom Corbett should be working on is the liquor stores. Instead, his administration appears to be desperate for a “win” and is pushing to privatize the state lottery as fast as possible without a thorough look.

Source: Scranton Times Tribune Date: 11/27/2012

Hold hearing before hiring lottery firm

The Corbett administration apparently has decided that gambling all day, every day, from any location, is a big part of the answer to funding programs for Pennsylvania's aging population.

That's bad policy, all the more so because the administration believes it can implement sweeping changes to the Pennsylvania Lottery, including private management, without legislative approval.

Pennsylvania is the only state that dedicates all of its lottery profits to programs for the elderly.

In the past, the lottery has expanded without legislative approval. The Legislature did not sign off, for example, on the addition of the Powerball and MegaMillions games.

This time, however, there is a huge difference. The administration wants to convert the lottery to private management. Private companies are accountable to their stockholders rather than Pennsylvania citizens.

Inevitably diminished public accountability under such a plan already is evident.

Camelot Global Service PA LLC, a British company, was the sole bidder to respond to the administration's request for proposals to operate the lottery. Its proposal said it would generate $34 billion in profits for the lottery over 20 years. Part of that would come from online keno games, which would establish 24-hour-a-day gambling, outside casinos, for the benefit of the lottery.

That, in itself, constitutes such a vast expansion of gambling that it should require legislative hearings, regardless of what the law says about the administration's authority.

But that's only one aspect of diminished transparency under private management. Keno is just one way that Camelot says it would increase lottery profits. It has not disclosed the others, however, claiming proprietary issues.

When the new session of the Legislature opens, lawmakers should convene hearings to examine the entire issue, including transparency and why the lottery, under state management, could not simply implement proposals for increased profit without having to worry about management fees.

Source: Harrisburg Patriot News Date: 11/25/2012

Op-ed: Keno expansion is a mistake for Pennsylvania

BY THOMAS SHAHEEN•• • • To paraphrase Sir Winston Churchill: We can always count on our government to do the right thing, after they have exhausted all the other possibilities.

Our state revenue department announced a proposal to add keno machines and online lottery sales. Of course, as with every other form of legalized gambling, there is purportedly a good cause that it will benefit. This time, the state is promising more money for the programs that our state lottery already funds. However, keep in mind that the Pennsylvania Lottery just reported a record profit in 2011-12 of more than a billion dollars. Regardless of the desire for added revenue, legalizing keno machines would be a significant expansion of gambling in scope and type. Simply put, it would place one of the most highly addictive forms of gambling just around the corner for millions of Pennsylvanians. It will intrude on our lives and lifestyle more than any other existing form of legalized gambling, with keno monitors and mesmerized gamblers occupying prime space in restaurants and taverns. And as is always the case, any increase in gambling revenue from allowing keno would be linked to costly increases in problem gambling. In keno, the gambler deposits money into the video machine’s slot. The machine will then ask the player to select 5 to 20 numbers. Once the numbers are selected, the machine performs its own random draw of numbers and then calculates and displays the player’s winnings depending on how many numbers matched. The primary reason keno is so highly addictive is that the player gets quick results, then can bet again and again, hoping for a win and, for so many, to foolishly try to make up for the previous losses. To make matters worse, keno is widely known as the game with among the worst odds for the player. On average, playing keno will pay back about 69 cents for every dollar you gamble. Gamble a thousand dollars, say, over the course of a month, and your expected “return” will be somewhere around $690. Translate: You lose $310 dollars. This type of easy-access gambling preys upon greed and ignorance, often targeting the most vulnerable among our citizens — those who can least afford it.

It’s what Maryland’s state comptroller called a “regressive tax on poor people.” He’s right. Let’s call this proposal what it is: a new and highly regressive tax. Placing keno machines in liquor-licensed establishments means that we’d potentially have more than 8,000 betting locations (each with a bank of machines) from neighborhood bars and taverns to your family’s favorite restaurants. So much for the old sales pitch of legalizing “limited gambling” that helped to turn horse racetracks into casinos. On top of creating neighborhood mini-casinos, we’d be increasing exposure to the potent mix of alcohol consumption and betting on keno machines. Canadian researchers found that even moderate alcohol use leads to gamblers taking greater risks (and losing more money) during video lottery terminal play. This is what is known as convenience gambling, a bad experiment tried in other states. More than a decade ago after permitting video gambling machines to help out the state, South Carolina

reversed course and banned the machines, realizing that the negative effects outweighed the benefits. More recently, Nova Scotia, Canada, implemented electronic keno in March 2009 over the strong objections of citizens. Nine months later, the government withdrew all of the keno machines (at significant expense) due to lagging revenue and fear of increasing problem gambling. Surely it is not the administration’s intent to take advantage of a person’s hope for a better life and hook them into a destructive lifestyle. But regardless of intent, that is what would happen for far too many people. The government should be in the business of crafting good policies that serve the public interest, the people of the commonwealth. We hope Gov. Tom Corbett and his revenue officials will see this as a serious policy mistake, drop the idea, and spare our citizens and communities from the fallout.

THOMAS SHAHEEN is vice president for policy at the Pennsylvania Family Institute, a nonprofit research and education organization representing more than 50,000 families.• •

Source: Harrisburg Patriot News Date: 11/26/2012

Democrat John Hanger to launch his 2014 Pa. gubernatorial bid on Wednesday

By JAN MURPHY, The Patriot-News

Count John Hanger in for the 2014 governor's race.

Hanger, a 55-year-old Harrisburg lawyer, will make a stop in Harrisburg on Wednesday to announce his candidacy for the Democratic nomination for governor.

Hanger will appear at 2 p.m. at the East Entrance to the state Capitol, or inside the East Wing Rotunda in the event of inclement weather.

He will start the day on Wednesday with a stop in Philadelphia and travel to Harrisburg by school bus in a symbolic sign of his commitment to public education. He will be traveling to Pittsburgh on Thursday to make his announcement there.

Hanger, 55, served on the state Public Utility Commission for five years in the 1990s and headed the Department of Environmental Protection under Rendell for nearly three years. He also was the founding president of the environmental group Penn Future.

He is one of more than a handful Democrats who have expressed interest in challenging incumbent Republican Gov. Tom Corbett in 2014.

The others include York businessman Tom Wolf; Philadelphia millionaire Tom Knox; Allentown Mayor Ed Pawlowski; state Treasurer Rob McCord; retiring state Auditor General Jack Wagner, and former U.S. Rep. Joe Sestak.

Source: Pittsburgh Post Gazette Date: 11/27/2012

Former state DEP Secretary Hanger to run for governor

By Laura Olson / Pittsburgh Post-Gazette

HARRISBURG -- Former state Department of Environmental Protection secretary John Hanger said today that he will announce a bid for governor later this week.

Mr. Hanger's announcement -- with events planned in Philadelphia and Harrisburg on Wednesday and in Pittsburgh on Thursday -- will make him the first of an handful of Democrats who will challenge Republican Gov. Tom Corbett.

In a brief phone interview this afternoon, Mr. Hanger, 55, said he would offer a broader look at his positions and policies during his announcement events later this week.

"I'm looking forward to the race and to discussing the critical issues," he said. "We're certainly getting going early."

Mr. Hanger, a Harrisburg attorney, served as DEP secretary under Democratic Gov. Ed Rendell and was a commissioner on the state Public Utility Commission for five years. He also was president of Citizens for Pennsylvania's Future, an environmental advocacy group.

In addition to Mr. Hanger, a number of other Democrats have been mentioned as potential candidates for the 2014 governor's race. Those include York businessman Tom Wolf, former U.S. Rep. Joe Sestak of Delaware County, Philadelphia businessman Tom Knox, and state Treasurer Rob McCord. Laura Olson: lolson@post-gazette.com or 717-787-4254.

Source: Pittsburgh Tribune Review Date: 11/27/2012

Former DEP Secretary John Hanger says he’s a candidate for Pa. governor

By Timothy Puko

Former state Department of Environmental Protection Secretary John Hanger is the first to announce he intends to run for governor in 2014, staking an early spot in what could be a crowded field of Democrats.

Hanger, 55, of Hummelstown in Dauphin County plans official announcements in Philadelphia and Harrisburg on Wednesday and in Pittsburgh on Thursday, he said by phone Monday. He is building his campaign staff and declined to discuss his platforms or fundraising before those announcements.

Republican Gov. Tom Corbett noted this month that every governor since 1968, when the state constitution was amended to allow a second term, has served consecutive terms. “I don’t plan on breaking that trend,” he said.

“We’re going to be going early so we can put together a top-quality team,” Hanger, a lawyer, said. “It’s obviously a big undertaking.”

It may be a big Democratic field, too.

York businessman Tom Wolf and Philadelphia millionaire Tom Knox have publicly declared interest in a gubernatorial campaign, inspired by big wins for Democrats in statewide elections this month, the Associated Press reported. High-profile officials including former U.S. Rep. Joe Sestak, Allentown Mayor Ed Pawlowski, state Treasurer Rob McCord and retiring state Auditor General Jack Wagner would not rule out gubernatorial runs in interviews for that story.

Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com .

Source: Scranton Times Tribune Date: 11/27/2012

Agency to make Marcellus housing aid decisions

By Robert Swift (Harrisburg Bureau Chief)

HARRISBURG - An initial outlay of revenue from gas drilling impact fees to address affordable housing needs in the Marcellus Shale region will be made next month by the Pennsylvania Housing Finance Agency.

The agency's governing board is scheduled to meet Dec. 13 to vote on proposals made by county and municipal officials to tap part of the $2.5 million collected for 2011 gas production, said spokesman Scott Elliott.

Under the 2012 impact fee law, affordable housing is identified as an impact of drilling because an influx of workers in small towns and rural areas has led to a scarcity of housing and increase in housing rents and prices. The issue was examined recently at a hearing of the Senate Urban Affairs and Housing Committee chaired by Sen. Gene Yaw, R-Williamsport.

The recent fluctuation in natural gas prices has an impact on available housing, said a Wyoming County housing official at the hearing.

"Our past few years have been challenging with regards to providing safe, affordable housing to many of the residents affected throughout the region," said Danielle Powell, a program manager for the Wyoming County Housing Authority. "Fortunately, in recent months we have experienced a stabilization in the number of families being affected by the rental housing crisis.

"We feel this is directly related to the plunge in natural gas prices and the industry workers moving on to more lucrative gas sites. However, we are concerned that as the price of natural gas increases in the market place, we will feel an increase in rental shortages once again."

Wyoming County is seeking impact fee revenue to underwrite a program to help landlords renovate existing buildings in return for commitments to rent to low-income residents.

Such a use would be in line with a "fix it first" strategy advocated by the Housing Alliance of Pennsylvania, an advocacy group.

Impact fee revenue can be used to rehabilitate vacant properties and provide low-interest loans to landlords who agree to fix up properties and rent them to low-income tenants, said HAP executive director Elizabeth Hersh at the Senate hearing.

Another approach is giving rental vouchers to help people bridge the gap between high rents and low wages or being on fixed income, she said.

The impact fee law specifies that revenue should go to make affordable housing more available to low- and moderate-income individuals and families, people with disabilities and the elderly. At least 15 of any funds awarded to a project must go to low-income individuals or families.

The $2.5 million in impact fee revenue will be distributed among 36 counties with at least half the sum going to lesser populated rural counties. The housing earmark will increase to $5 million for 2012 production.

rswift@timesshamrock.com

Source: Harrisburg Patriot News Date: 11/27/2012

DEP Secretary: Pennsylvania continues to benefit from Marcellus Shale

By Mike Krancer & Patrick Henderson• •

It is now unanimous: America’s potential domestic energy production is off the charts and Pennsylvania is the sweet spot. The International Energy Agency just issued its landmark annual World Energy Outlook report, forecasting that the United States will pass Saudi Arabia in energy production and that North America will be at the forefront of a sweeping transformation in oil and gas production that will affect the entire world.

This comes on the heels of reports from Standard & Poor’s and ITG showing that the amount of recoverable gas in the Marcellus Shale play might be much greater than previous government estimates. This is good news. With Pennsylvania as the centerpiece, real American energy security and a real force in American job growth are available to us now — if we continue to make the right decisions to obtain and use what we have. Studies confirm that Pennsylvania’s Marcellus Shale formation is the global superstar of natural gas formations and is a key driver in true American energy independence. Marcellus Shale gas will help make Pennsylvania the energy capital of the nation and spark the rebirth of our petrochemical and manufacturing base.

Production from Marcellus wells is exceeding expectations and some of the wells are among the most productive in the world. We already have 240,000 jobs related to our oil and natural gas extraction activities. When it comes to production numbers, Standard & Poor’s own words confirm that this is a “mere drop in the bucket” of the Marcellus’ full potential. These reports also say that the potential natural gas liquids recoverable from the Marcellus are proportionally higher than any other shale gas formation. This is terrific news for Pennsylvania, validating Royal Dutch Shell’s announcement that it is exploring the construction of an ethane cracker facility in Beaver County, a project that would account for 10,000 jobs in the construction phase alone. Also reported is a dramatic and historic change in the direction of natural gas flows in America. Flows have always been from the west or southwest to the east. Not anymore. Pennsylvania became a natural gas exporter in 2010 and is perfectly situated to be the supplier to the tremendous growth markets of the northeastern U.S. This new energy revolution also is being seen in Philadelphia. Refineries that were just recently pronounced dead have new life — in no small part because of hydraulically fractured, domestic oil and natural gas. The result is thousands of jobs and cleaner air from the use of natural gas and lower sulfur domestic Bakken crude oil at the refineries. Pennsylvania oversees this development responsibly under its effective oversight and comprehensive set of laws and regulations. Through Act 13, Gov. Tom Corbett and the Legislature have not only enhanced environmental protection standards but also put in place a per-well impact fee with an initial distribution of $204 million to Pennsylvania municipalities and commonwealth agencies. From encouraging wastewater recycling to one of the most progressive hydraulic fracturing fluid disclosure laws in the nation, the state’s oil and gas program assures responsible, protective development of natural gas.

Pennsylvania has more than doubled its number of oil and gas inspectors, and they have conducted more than 20,000 inspections just this year. Every Pennsylvanian is already benefiting from Marcellus Shale. We are only at the beginning of building Pennsylvania into the energy center of the world and the jobs center of the country. American energy independence is at hand, and Pennsylvania is leading the way. • Mike Krancer is secretary of the Pennsylvania Department of Environmental Protection. Patrick Henderson is Gov. Tom Corbett’s energy executive.

Source: Harrisburg Patriot News Date: 11/27/2012

We're paying the price for natural gas drillers in Pennsylvania

By Bob Myers •

On Oct. 25, Gov. Tom Corbett signed into law Senate Bill 941 (sponsored by Jake Corman, R- Centre County), which increased the maximum fines for public drunkenness and underage drinking from $500 to $1,000.

Demonstrating the hard-nosed commitment to law enforcement he displayed as attorney general, Gov. Corbett noted that the legislation reflects his philosophy that “justice, in order to work, must be administered with firmness, compassion and common sense.” Sen. Corman hopes that the bill will provide “a deterrent so that the individual makes better decisions the next time around.” While on the topic of deterrents, perhaps the Legislature and Gov. Corbett could use the same strategy to address another problem. Despite the slowdown in gas production, the Department of Environmental Protection website suggests that the natural gas drillers aren’t doing any better at obeying the laws designed to protect the state’s environment. A quick glance at the records of three companies in 2012 reveals the following incidents: On Jan. 18, Range Resources spilled 30 gallons of diesel onto the ground at a site in Washington County. A week later at a Range site in Centre County, three barrels (126 gallons) of treated flowback fluid escaped into the groundwater under the well pad. On February 1, Anadarko spilled 200 gallons of triethylene glycol onto the containment area and the ground at another Clinton County site. The incident isn’t listed as resolved until March. On Feb. 23, hydraulic fluid from a truck at an Anadarko site seeped into a drainage ditch in Clinton County. On Jan. 18, Enerplus spilled 30 barrels of drilling fluid at a Clinton County site; 10 barrels (420 gallons) made it to the ground. On Aug. 24, Enerplus released treated flowback fluid onto a Clinton County roadway with drainage to a wetland. According to the DEP website, these repeat offenders were not fined a single dollar for any of these incidents. But this shouldn’t be surprising. Citizens for Pennsylvania’s future has reported that during the first three months of Gov. Corbett’s administration, enforcement actions dropped from the Rendell administration’s ratio of one enforcement for every 1.7 violations to one enforcement for every 8.69 violations. Likewise, Clean Water Action of Pennsylvania has analyzed 2011 DEP violation records. It discovered that nine out of 10 violations resulted in no penalties at all. In fairness to the governor and Sen. Corman, I suspect that underage drinkers and public drunkards have not been as generous as the drilling companies have. According to Common Cause Pa’s marcellusmoney.org , many elected officials receive money from the gas industry. Sen. Joe Scarnati, R-Jefferson, tops the list of lawmakers with $359,145 and Sen. Corman is in the top five receiving $91,290. But that is overshadowed by the $1,813,305 that has been given to the governor. Our lawmakers don’t like people to draw assumptions between these contributions and favorable treatment of gas companies, but it’s hard not to when you look at the facts. But at least we no longer have to worry about 18-year-olds spilling 12 ounces of beer in our state forests. • Bob Myers is director of environmental studies at Lock Haven University.

Source: Harrisburg Patriot News Date: 11/26/2012

Domestic violence charges dropped against special adviser to state welfare secretary

By DAN MILLER, The Patriot-News

Charges of simple assault and harassment against Brandon Danz of Lower Allen Township were dismissed today after the alleged victim refused to testify during a preliminary hearing before District Judge Charles Clement.

The arresting police officer called the woman to the stand. After several times answering the officer's questions with "I do not want to testify," Clement asked the woman if she would be giving the same response to all of the officer's questions. The woman said yes, and her lawyer nodded in agreement.

The officer said he had no more witnesses. Danz's lawyer, Alan Goldberg, asked that the charges be dismissed, and Clement agreed.

The Department of Public Welfare had suspended Danz without pay from his $100,988-a year job as special adviser to state Welfare Secretary Gary Alexander, pending outcome of the case.

Word on whether Danz's status had been changed in light of the charges being dismissed was not immediately available.

The charges stemmed from an alleged incident at a residence on Cobblestone Drive on Sept. 22, where police said Danz slammed a bedroom door on his girlfriend, causing injuries to her right upper arm.

The woman's name has been withheld by PennLive.com.

Source: Harrisburg Patriot News Date: 11/26/2012

Former Penn State president Graham Spanier seeks dismissal of charges in new motion

By CHARLES THOMPSON, The Patriot-News

Attorneys for former Penn State president Graham Spanier have asked the judge presiding over the grand jury investigation into the Jerry Sandusky child sex scandal to toss all charges against Spanier.

Spanier faces obstruction of justice, perjury, endangering the welfare of children and other counts for his role in what prosecutors have called a "conspiracy of silence" aimed at keeping allegations against Sandusky outside of the public eye. In a motion filed today with Judge Barry Feudale, Spanier's lawyers said prosecutors improperly relied on testimony of former University Counsel Cynthia Baldwin in making their case against him this month. Spanier believed, when he testified before the Sandusky grand jury in April 2011, Baldwin was representing him, and he has never waived his attorney-client privilege, his attorneys argue. Therefore her testimony can not be allowed to be used against him. In the alternative, if the judge finds Baldwin was - as she has more recently contended - representing the university only, then Spanier was denied the right to counsel during his own grand jury appearance, his attorneys argue. "Ms. Baldwin's presence... deprived Dr. Spanier of counsel in deciding whether or not to exercise the privilege against self-incrimination because he was led to believe that he was, in fact, already being represented," the motion states. Feudale, it suggests, should prevent Spanier's testimony from being used in the case. Either way, the charges would fail, the defense asserts. Prosecutors in the past have argued Baldwin was not conflicted in initially trying to represent Penn State and individual university officials because she initially expected the officials would be cooperating witnesses, and did not understand at the time what had allegedly been hidden from her. Because Spanier's attorneys say they would appeal a defeat of this motion to Pennsylvania Supreme Court, they also filed a separate motion in Dauphin County Court today seeking a delay in the Dec. 13 preliminary hearing. Neither court had acted as of last night.

Source: Pittsburgh Post Gazette Date: 11/27/2012

Attorneys representing Graham Spanier ask judge to toss out his charges

By Liz Navratil / Pittsburgh Post-Gazette

Attorneys representing former Penn State University president Graham Spanier, who has been charged with perjury in connection with the Jerry Sandusky sex abuse investigation, asked a judge today to toss out the charges against him.

Prosecutors charged Mr. Spanier, 64, with perjury, obstruction of justice and endangering the welfare of children earlier this month, saying he and other administrators were part of a "conspiracy of silence" aimed at covering up accusations that Sandusky sexually abused boys over a 15-year period.

His arguments, like those presented by former senior vice president of business and finance Gary Schultz and suspended athletic director Tim Curley in their cases, hinge largely upon the role played by Cynthia Baldwin, who was general counsel for the university during the grand jury investigation.

Attorneys representing Mr. Spanier, Mr. Curley and Mr. Schultz have said their clients believed Ms. Baldwin was representing them, but she later told investigators from the group led by former FBI director Louis Freeh that she was representing the university.

In the motion filed today, Mr. Spanier's lawyers argue that if Ms. Baldwin was representing Mr. Spanier, her testimony, which the grand jury presentment says prosecutors relied upon, would violate attorney-client privilege. If she was not representing Mr. Spanier, the charges should be thrown out because Mr. Spanier was denied his right to an attorney, mistakenly believing that he already had one, his attorneys argue.

Lawyers representing Mr. Spanier also filed a motion today asking the judge to postpone Mr. Spanier's Dec. 13 preliminary hearing, saying that they would like to have time to file appeals if their requests regarding Ms. Baldwin's testimony are denied.

Liz Navratil: lnavratil@post-gazette.com , 412-263-1438 or on Twitter @LizNavratil.