PA Education Association official says their pensions not in fiscal trouble -- despite warnings to the contrary!

Posted on Sat, Sep. 30, 2006

The Philadelphia Enquirer

Pensions warning questioned A Pa. teachers' union said there's no fiscal crisis, and doesn't back all of the auditor general's ideas. By Joseph N. DiStefano Inquirer Staff Writer

The head of Pennsylvania's largest teachers' union is urging the public not to worry about the Public School Employees' Retirement System's financial condition.

"PSERS is not in a fiscal crisis," James R. Weaver, president of the Pennsylvania State Education Association, said in a statement Thursday. Auditor General Jack Wagner had warned two days earlier that the system faces a growing gap between investment assets and pension liabilities.

Wagner's remarks followed his release of audits reviewing the state teachers' and state workers' pension systems. He said the systems were generally well run, although he recommended improvements to their management and governance. But mostly, Wagner called for fiscal solutions that would "not be easy or painless."

According to Weaver, the auditor general meant to warn not of an actual financial crisis, but rather of a "potential" crisis, "which can be avoided if prudent measures are adopted."

But the union does not support measures that are key to Wagner's program.

Wagner's recommendations begin with a cap on current pension levels and a return to the former minimum 10 years' employment requirement to qualify for a pension, instead of the current five-year standard.

The teachers' union does not support those proposals, union spokesman Wythe Keever said.

To the contrary, the teachers' union wants the General Assembly to pass a cost-of-living adjustment boosting pensions for retirees - although Keever acknowledged that goal faces "an uphill battle in the current political environment."

The union also wants to keep the minimum-service requirement at five years. That standard was set in 2001 as part of a general increase in pensions to elected officials and other government retirees.

The union is comfortable with other Wagner proposals, including a guaranteed minimum yearly subsidy to the pension plan from Pennsylvania taxpayers, Keever said.

The pension is financed by investment profits, school districts' payroll deductions, and direct subsidies. The subsidies rose as pensions and eligibility increased and investment profits fell.