Ortitay Announces Passage of Needed Pension Reform
Plan protects taxpayers and keeps promises made to state employees
HARRISBURG – Rep. Jason Ortitay (R-Washington/Allegheny) today announced the passage of necessary reform of the state’s public pension systems. Currently, the State Employees' Retirement System (SERS) and the Public School Employees' Retirement System (PSERS) have a joint unfunded liability of more than $50 billion, and are at risk for failing.
“The time for pension reform is now,” Ortitay said. “Whether we like it or not, we are in this crisis, and the weight of public pension costs are driving up local property taxes and crushing the option of higher state funding for our schools, our roads, and much more.”
“Employees are facing this crisis due to no fault of their own, but regardless of how we got here, we cannot continue to sustain the status quo. Failure to act will put the benefit of state employees, teachers and retirees in jeopardy.”
Under the pension reform plan,
Senate Bill 1, state employees, first hired on or after Jan. 1, 2016 and school employees first hired on or after July 1, 2016, will be assigned a hybrid 401(k)-style and cash balance plan. Senate Bill 1 does not take away any benefits already earned by current employees or impact the pension benefits of current retirees.
“As promised, I declined to take a state pension upon being elected because I was aware of the enormity of the pension crisis,” Ortitay said. “This plan helps us bring an end to the growing unfunded liability.”
All members of the General Assembly and elected officials will also be moved to the hybrid 401(k)-style and cash balance plan upon election or re-election to a term that begins after Dec. 31, 2015. Future state police, state law enforcement officers and corrections officers are exempt from the hybrid 401(k)-style and cash balance plan under Senate Bill 1, and will remain on their current benefits plan.
“The plan passed today ensures we keep our promise to the public servants who were promised future benefits, but is also respectful of taxpayers,” Ortitay said.
To address abuses that lead to the “spiking” of pension calculations, the plan also revises the benefits calculation, which will now factor in a state employee’s five-year final average salary.
“Four years ago, public pension costs represented 3 percent of the state budget. In four years from now, that number will jump to 10 percent and continue to rise. Left unaddressed, not only are Pennsylvanians at risk for higher taxes, but tax dollars that could have been dedicated to classroom funding and programs for needy citizens, will instead, continue to fund a failing pension system.”
Senate Bill 1 is now headed back to the Senate for concurrence before going to the governor’s desk for a signature.
“This legislation is a good first step to solving the pension crisis. Efforts now need to be focused on eliminating the remaining debt so that future generations will not be burdened.”
Ortitay is also a co-sponsor of
House Bill 900, which would enact a 20-year amortization period for the balance of any recognized unfunded liabilities. The bill was formally introduced into the House on June 24.
Representative Jason Ortitay
46th Legislative District
Pennsylvania House of Representatives
Media Contact: Morgan Wagner
717.260.6281
mwagner@pahousegop.com
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