By State Reps. Warren Kampf (R-157) and Mike Tobash (R-125)
It’s an ocean of red – a flood of debt that threatens the financial stability of our school districts for the next 30 years. The news is no better for the state government system.
The systems that currently provide state workers and school district employees with their pensions are hemorrhaging. Our state is facing a more than $50 billion debt, and taxpayers are increasingly responsible for the required cash transfusion.
Following the stock market bubble in 2001 that overinflated the investment returns earned on our pension funds, legislators increased the payouts for state and school employees. Subsequent budgets then failed to fund the systems with sufficient dollars to save for those promises. After the market crash of 2008, huge sums were obliterated and the unfunded liability exploded, now totaling more than $50 billion. This is not only unfair, but it’s also unsustainable.
Both of us are working to make fundamental changes to this system so we can move our state and school district retirement systems into the modern times. We need to have a complete or a significant move to a defined contribution or 401(k)-style public pension plan so we can reduce overall costs, pay off debt and shift the risk from taxpayers.
The current budget accounts for $2 billion in pension payments, a cost that will spike to more than $4 billion annually by 2016. And if our system is not fundamentally changed now, the waves of debt will wash over generations of Pennsylvanians not yet born.
Our plans would begin to lift the burden from taxpayers for market fluctuations and historic mishandling of pension obligations for future employees. They would bring public employee retirement plans in line with those available to most people. For decades, private sector companies have moved away from these dinosaurs into defined contribution plans. A similar move by Pennsylvania would show our constituents that we can learn from mistakes of the past, and that we realize what has happened in places like Illinois; Rhode Island; Detroit, Mich.; and Stockton, Calif., can happen here.
The bottom line is this: We cannot continue expanding a program that is crippling the finances of our school districts and our state. By enrolling new employees in a plan with a complete or partial defined contribution plan, we are moving in the right direction for Pennsylvania taxpayers.
We are calling on our colleagues and our new governor to put this kind of legislation on the fast track, to begin voting on it later this month or in March, so we can have the final product ready for implementation in less than a year. We must act now.
Representative Warren Kampf
Representative Mike Tobash
Media Contact: Krisinda Corbin
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