New Report Shows Pension Debt Skyrockets 730 Percent in Ten Years
June 2, 2016, HARRISBURG, Pa.—In 2006, the president of the largest state workers’ union stated, “Pennsylvania is not the Titanic, and there are no icebergs in our pension fund’s future.” The claim came in response to a Commonwealth Foundation study on the looming public pension crisis. Ten years later, Pennsylvania continues to approach the public pension iceberg at full speed, with the state’s unfunded pension liability growing by a stunning 730 percent.
In Beneath the Surface: The Pennsylvania Public Pension Saga—Ten Years Later, Commonwealth Foundation Senior Fellow and actuary Richard C. Dreyfuss shows how the threats warned about in his 2006 pension report, Beneath the Surface, have become reality.
As pension costs have skyrocketed, school districts have been forced to cut back on popular programs and seek new revenue sources. As a result, property taxes have risen across the state, jeopardizing the livelihoods of Pennsylvanians on fixed incomes. Today, the state’s unfunded pension liability stands at a colossal $63.2 billion.
Dreyfuss stated:
A decade ago, government union leaders denied any danger to Pennsylvania’s public pension system—even calling PSERS and SERS ‘among the strongest Pension Plans in the nation.’ The iceberg union leaders claimed was nonexistent is about to sink our economy. Hindsight is supposed to be 20/20, but shockingly, these same unions remain adamantly opposed to any significant pension reform.
If the captain of the Titanic had been given a do-over, do you think he would have steered straight toward the iceberg again? That’s essentially what many are doing by ignoring the problem and scuttling reform attempts.
Bond ratings agencies have repeatedly cited Pennsylvania’s inability to address its pension debt as the reason for downgrades, which drive up borrowing costs at the state and local levels. Unless we want our children and grandchildren saddled with our pension debt, Pennsylvania must adopt defined contribution plans for new hires while also reforming pension funding policies as the private sector has already done.
Richard Dreyfuss and other Commonwealth Foundation experts are available for comment. Please contact Gina Diorio at 862-703-6670 or gld@commonwealthfoundation.org to schedule an interview.
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