From RH Jones, May 8, 2008
Subject: Re: PA - House committee votes unanimously to send pension enhancement bill to floor for vote
Isn't it also time the State of Ohio gave an ad hoc increase to retired educators? Many retired teachers have been retired for years and have not seen an ad hoc raise from the legislature. They are trying to keep their homes and to put food on the table at a time when energy prices are causing sky rocketing prices of nearly everything. The simple 3% COLA that the STRS provides hardly buys a couple tanks of gasoline.
From John Curry, May 6, 2008
Subject: PA - House committee votes unanimously to send pension enhancement bill to floor for vote
State pension hikes could cost taxpayers $10 billion
HARRISBURG -- A multibillion-dollar bill to increase pension benefits for some 250,000 retired state workers and teachers advanced out of a Pennsylvania House committee on Tuesday.
The State Government Committee voted unanimously to send to the floor a bill that would provide increases ranging from about 2.7 percent for the most recently retired to 25 percent for those who retired before July 1990.
The estimated cost is $10.4 billion over 20 years, but an actuarial analysis should produce a more precise figure.
To be eligible, workers must have retired before July 2, 2007, and be receiving benefits by July 1 of this year. Retired lawmakers are among those who would receive increases.
Election-year pressure on the Legislature is mounting from retirees, fueled by reports that the two large public-sector retirement plans have reaped eye-popping investment returns in recent years.
"What's a better economic stimulus package than to give your former state employees a cost-of-living increase, which they're going to spend right here in Pennsylvania?" said Nelson McCormick, president of the 18,000-member Pennsylvania Association of Retired State Employees.
The Pennsylvania School Boards Association opposes the bill and warned of its cost.
"The question really isn't whether or not it's affordable," said Tim Allwein, the association's assistant executive director. "The question is whether or not it's going to raise taxes, and it certainly has the likelihood of doing that."
Rep. Matt Baker, R-Tioga, a key backer of the measure, said he and many other legislators have been hearing from retirees about their need for financial relief.
The last cost-of-living increase was in 2002, one year after passage of the so-called "pension grab" bill that boosted benefits by 25 percent for most workers and by 50 percent for most state lawmakers.
"The cost of living over six years has gone up tremendously for a lot of these retirees living on fixed incomes," Baker said.
The Public School Employees' Retirement System would need an estimated $348 million a year for 20 years under the bill, according to a preliminary analysis Baker provided. The cost would be funded by a state government subsidy and by local school taxes.
The higher pensions would cost the State Employees' Retirement System an estimated $174 million annually for 20 years. Last year, the average pension in the state employees' system for people who retired at normal age was about $21,000.
Both the Democratic governor and Republicans who control the Senate expressed caution about the idea.
A spokesman said Gov. Ed Rendell will not endorse the legislation unless its supporters convince him they can raise the billions of dollars it requires.
Senate Republican leaders have not reviewed the bill's details yet, but feel that concern about the pension funds' financial health warrants a careful approach, a spokesman said.
House Majority Leader Bill DeWeese, D-Greene, was an early supporter of such a pension boost, a spokesman said.
"The most important thing to keep in mind is that today's committee action ... is the first step in the process, and there will be ample time for additional public input on the proposal," said DeWeese spokesman Tom Andrews.
The plan the committee endorsed yesterday was patterned after a bill introduced two weeks ago by Rep. Steve Nickol, R-York, a leading authority in the House on pensions and a member of the teacher pension board.
Six years is the longest time period between passage of cost-of-living bills since the state retirement laws went into effect in the early 1970s, Nickol said.
Nickol called the bill "an opening gambit, so to speak." He described the proposal as generous and much larger than anything the General Assembly is likely to approve.
Despite a tepid stock market, Pennsylvania's teachers' pension fund earned 13.8 percent last year, while the state workers' pension fund's return was 17.2 percent.