Something’s Gotta Give On Public Pensions

Something’s Gotta Give On Public Pensions — Pittsburgh’s ever-shrinking pension fund was valued at $272.2 million on June 30 and had a liability of $989.5 million. Mayor Luke Ravenstahl wants to lease the city’s parking meters and garages by which he hopes to raise  $200 million to dump into it and stave off a state takeover.

As though the state doesn’t have pension financing issues of its own.

And that brings us to reality.

Neither the state nor municipal tax burden can be increased without, ultimately, impoverishing the unconnected class which most of us happen to be albeit the Democrat-voting side of “us” doesn’t generally believe it. Meanwhile, there are necessary government services that need to be funded. Pensions, as mean as it may be to say, is not one of them. In other words, the people fixing our roads and patrolling are streets are not the ones receiving pensions. Granted, they expect to. They consider pensions to be part of their wages and if they should see those who have gone before lose their pensions they might not patrol the streets as diligently or even stop altogether, but that just gets us to the next matter which is how to resolve the issue.

One is to let reality run its course. If, for example, the fund has to cough up $989 million but can only pay out $272 million, divvy what is there and walk on. It’s not like it’s never happened in the private sector .

That, however, would be extraordinarily cruel. One would expect in the case of Pittsburgh a lot of those pensions are going to secretaries and garbagemen and are not all that big in the first place, and trying to live on 28 percent of it would be extremely hard.

A better, kinder and much more moral approach would be to set a limit on outlays to, say, $40,000 regardless of whatever was in the contract until Pennsylvania’s economy can grow itself out of the deficit. This would apply to every state and municipal worker from every living governor on down.

One can survive very easily on $40,000. One unwilling to accept this sacrifice in this present crisis was never worthy of holding authority in education or on the bench or in the legislature, anyway, and should consider it due chastisement.

Something’s Gotta Give On Public Pensions

Something's Gotta Give On Public Pensions

Pa. In Top 4 In Legislative Pay

Pennsylvania’s state legislators are the fourth best paid in the nation, according to The Pew Center of the States. At $78,314, it puts the wonders of Harrisburg  just behind third place New York ($79,500) and second place Michigan ($79,650) but with a ways to go to catch the champ which is California at $95,291.

What’s interesting about the rankings is that it correlates nicely with the listing of states with the greatest fiscal problems. Someone may be respond with the claim “correlation does not equal causation” and the proper response to that would be “Ho, ho, ho. You want to buy a bridge?”

BTW, the Reading Eagle has a column noting the state House members worked 119 days last year while our senators clocked in for 81. Maybe that’s why they buy into the claim that public school teachers are overworked.

And of course, the Pew list doesn’t account for all the neat little perks Pa. solons get. Maybe Pennsylvania’s fiscal crisis is even worse than it seems.

Hat tip to Tony Phyrillas

CF Ask: Are All Lawmakers Crooks?

Commonwealth Foundation, today, itemized the recent charges, convictions and investigations of current and recent Pennsylvania state legislators and boldly claimed the crime rate in the state Capitol to be higher than our worst cities.

The CF’s Nathan Benefield pointed out that State Rep. Mike Veon, who had served as PA House Democrat Whip, has been sentenced to 6 to 14 years for his role in Bonusgate while trials are pending against former speakers of the house Bill DeWeese and John Perzel as well as former representatives Brett Feese and Steve Stetler. Note that Perzel and Feese are Republicans while DeWeese and Stetler are Democrats.

Benefield also points out that on the Senate side former powerbroker  Vince Fumo has been convicted, Sen. Jane Orie  has been indicted, and the feds have raided the homes and offices of Democratic Leader Bob Mellow  and Sen. Ray Musto. Here, Ms. Orie is the lone Republican and I’ll grant you that my suspicion is that when all is said and done the scandal will be the behavior of the prosecutor, who happens to belong to a powerful Democrat family, rather than that of the Senator.

Still it is the reasonable person that will think that the Pennsylvania is run by thieves and this would of course explain our chronic budget crisis and bloated pension plans
Don’t forget that those in trouble aren’t  backbenchers felt by their colleagues to be dirty, but men whom their peers elected to led them i.e. two speakers of the house, a Democrat house whip and a Democrat senate leader.

Yes, Pennsylvania, you are run by thieves.

One solution Commonwealth Foundation broached to bring a level of quasi-honesty to Harrisburg is term limits. To that I say dead on.

Pension Reform Is Generational Theft

By State Rep. Sam Rohrer

I was one of only six members of the Pennsylvania House of Representatives to vote against a bill that would increase the cost to taxpayers paying for retirement benefits for current state employees, teachers and legislators in the state’s two pension systems.

House Bill 2497 is like slapping a fresh coat of paint on a building with a crumbling foundation. The changes in this legislation would do very little to improve the existing structural deficiencies in the state’s pension systems.

The bill implements a series of changes to the state’s two major retirement systems — the State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS).

The measure would achieve a short-term reduction in contributions by refinancing current pension liabilities over a 30-year period and in reality deferring costs.

This is a case study in generational theft. The Rendell administration skimped in recent years on its obligation to fully fund the pension systems and now that responsibility will be passed on to future generations. This bill just puts the burdens of today on the taxpayers of tomorrow. It makes some responsible changes for newly hired workers, but adds billions of dollars in costs to future taxpayers who will be saddled with greater problems than we now have.

The pension change was likely motivated by a desire to use any short-term savings to pay for additional state government spending.

For years, politicians in Washington, D.C., have been raiding the Social Security system to pay for pet projects. This bill does something similar on the state level. By pushing off pension costs to future years, the General Assembly just frees up more dollars to spend today. There are no substantive savings for taxpayers in this bill. If there were, taxpayers should expect to see the overall costs of state government go down. This is just a numbers game where a near-term decision will underfund the pensions so overspending can occur in another area.

The changes in the pension benefits systems fall far short of bringing them in line with similar private sector retirement plans. The bill maintains the existing defined benefit system, where state employees, school teachers and legislators are guaranteed certain benefits. Under this system, if pension investments fail to meet their goals, taxpayers are on the hook to make up the difference.

Approximately two-thirds of private employers have shifted to defined contribution plans, where the business will match an employee’s contribution to a retirement account. Under this system, the employee bears the burden of risk associated with fluctuations in investment performance.

The decision to maintain the defined benefit pension systems will wind up costing taxpayers significantly more than a defined contribution system, especially if pension system investments underperform in the years ahead.

Many Pennsylvania retirees and workers lost huge chunks of their pensions in the economic meltdown. Yet this bill tells them that, while their own retirement benefits fluctuate, they must guarantee the benefits of taxpayer-paid workers. This legislation essentially says there is one set of rules for taxpayers for their own retirement accounts and a completely different set of rules for those who work for government.

Some of the beneficial changes in the pension bill included:

Doubling the amount of time from five years to 10 years that an employee must work before becoming “vested” – or guaranteed benefits – in the pension plans.

Reducing the multiplier used to calculate pension benefits from 2.5 percent to 2 percent.

Increasing the minimum retirement age for PSERS members to 65 with three years of service instead of the current minimum of 62 with one year of service.

Increase from 50 to 55 the retirement age for representatives and senators who take office for the first time next year.

Eliminates the option for retirees to take a lump-sum payment upon retirement.

All of the changes would only apply to new state workers, teachers and lawmakers who are hired or take office next year. The benefits and requirements of current pension plan participants would not change.

While these changes are a small step in the right direction, they are overridden by the sheer magnitude of the interest costs alone due to the re-amortization over 30 years, all of which will be paid by future taxpayers. In addition, these changes do not protect taxpayers by bringing public pension benefits in line with equivalent private sector retirement plans.

Taxpayers are tired of living by one set of rules while government lives by another. It appears Harrisburg still hasn’t heard that important message.

The bill now heads to the Senate for consideration.

Mr. Rohrer , a Republican, has represented Berks County’s 128th District 128th District in the Pennsylvania House since 1993. He will retire from the Legislature at the end of the year. This column This column ran in the Mercury serving Pottstown, Pa.

Feds Call On Mr. Mellow

Agents from the FBI and IRS executed search warrants  at the home and district office of Pennsylvania Senate Democrat Leader Robert J. (Bob) Mellow yesterday.

The feds were mum on what it was about and Mellow spokeswoman Lisa Scullin said the senator is cooperating with all request.

Mellow has represented the 22nd District  since 1971. 

He announced in February that he was going to retire to spend more time with his family.

Mellow’s pension is expected to be $313,000. If, however, this matter leads to a conviction for a crime in which Mellow used his position to commit theft, bribery, forgery or perjury, Mr and Mrs. Taxpayer will be off the hook.

Most would accept that voting to give yourself a $313,000 pension is a crime.

In other Pa. corruption news, Mike Veon  the Democrat who represented the 14th District in the State House from 1985 to 2006 and achieved the rank of party whip, was sentenced, yesterday, to six to 14 years for his role in Bonusgate in which tax dollars were used by incumbents in both parties, albeit mostly by the Democrats, to fund re-election campaigns.  

Harrisburg To Spend Twice-Plus What You Might Think

The dying dinosaur media chronicles yet another  Pennsylvania budget crisis in dry wire service reports on inside pages focusing like a laser beam on the $29.03 billion in general fund spending sought by Gov. Rendell — which, btw, would still be $1.04 billion higher than last year — with nary a mention that Harrisburg expects to spend more than twice that — $37 billion to be specific — regardless of what is passed.

This usually unremarked-upon spending is via special funds estimated for next year at $14.4 billion and federal money estimated for next year at $23 billion and which does not include stimulus money which was folded right into the general fund.

The state has 139 special funds to which money is directed from sources specified by law and their disbursements this year range from  zero  for the Energy Conservation and Assistance Fund to $2.58 billion for the State Employees Retirement Fund and $5.36 billion for the School Employees Retirement Fund.

Now, one would think that expenditures for things like pensions are set in stone and must not be considered in resolving the looming shortfalls, but then you would have to say that it is moral and just take from newlyweds, widows and struggling businesses to pay  legislators like state Sen. Robert Mellow (D-22) pensions of $313,000, and bureaucrats like John Winchester salaries of $236,265 to administer the money,

And, of course, it is not.

And I would hope that all would understand it not just kinder but wiser to see government workers take a hit in the pensions bringing them down to $50,000 for the year, than see someone forced from their home or to shut their business, the latter of which would obviously cut the tax base even further  would lead one to wonder how the state would end up funding these Cadillac pensions anyway.

Local government, btw, is expected to spend $67.8 billion on top of that next year in Pennsylvania.

A big hat tip to Nate Benefield and the always excellent Commonwealth Foundation along with PaIndependent.Com

Karl Marx Has Answer For Looming Pa. Pension Pain

An unlikely source provides the solution to the looming fiscal crisis concerning the funding for pensions for retired Pennsylvania state workers and public school teachers which is expected to cause the tax burden to rise by $1,360 by 2012 for the average resident of the state.

Obviously, the money has been contracted and must be paid. So what to do?

Well the answer is ironically in the Communist Manifesto, the second plank of which calls for a heavy progressive income tax.

It’s simple. It’s beautiful.

Pensions, of course, are not taxed in Pennsylvania so here is how it would work:

–the first $50,000 of a public pension would remain untaxed.

–the next $50,000 would be taxed at 50 percent.

–anything above that would be taxed at 90 percent.

Let’s use the looming $313,000 pension of state Sen. Robert Mellow (D-22) as an example. There would be no tax on the first $50,000 so that means that Sen. Mellow would get $50,000 upon which to survive. He would then pay 50 percent of the next $50,000 back to the state adding $25,000 to yearly income for a total of $75,000. Of the remaining $213,000 he would pay back 90 percent leaving him with an additional $21,300 and an annual income of $96,300.

He could probably survive on that.

Who could object? Certainly not the bulk of pensioners who are retired teachers and consider themselves progressive and fully subscribe to the concept of “from each according to his ability, to each according to his needs.”

Granted most of our legislators are simply greedy and not full-blown Marxists and would certainly provide an obstacle to reform but certainly not an insurmountable one.

And yes the average taxpayer would still see somewhat of an increase in his burden but a ray of hope has been found.

Pennsylvanians, Prepare For Serious Pension Pain

Pennsylvanians should prepare for some serious suffering regarding disposable income come 2012-2013 and the cause is going to be their additional contributions to pay for the pensions of retired  public school employees,state workers, legislators, judges and others.

The Commonwealth Foundation estimates that the annual hit will be $1,360 for the average taxpayer.

State EmployeeRetirement System (SERS) which handles non-school retirees is funded entirely by state taxes and the looming annual bite to handle the coming crunch for Mr. Average is expected to be $390.
The School Employee Retirement System (PSERS)  is 54 percent covered by state taxes with the rest coming from school district taxes. The Commonwealth Foundation estimates the average bite to come to about $970.

And what is going to be the result of the suffering? Well it means that Senator Robert Mellow (D-22) will be able to survive on a $313,000 annual pension. It kind of makes you feel warm and fuzzy.

Of course we can expect our public servants to be reasonable in helping resolve the crisis. Oh, ho ho ho. I just wrote that to make you smile and take your mind off the coming pain. Of course, we can’t expect that.

People, it’s time to start getting angry. 

If you need help, check out the salaries of those who work for the SERS and PSERS

Pa House Members Use Per Diem To Buy Houses

Pennsylvania state representatives  who don’t live within 50 miles of Harrisburg are eligible for a $163 per diem when in the state capital on legislative business. The money is supposed to be used for food and board — $111 for housing and $52 for meals.

It turns out some of members of our legislature are using it to solve the housing crisis.

For instance Jim Wansacz (D-114), rather than stay at hotels, bought a three-story row home at314 S. Second St. on Oct. 2, 2003, for $72,000, and is using the per diem to pay off his 30-year mortgage. Pretty clever.

He acknowledges he also rents to other legislators.

Now you might wonder why our representatives need the stipend since they are already getting a base pay of $78,000 along with a lot of really great benefits, but that would just show your insensitivity and intolerance to the important work they do.

For a list of other houses being bought by House members see this story from the Scranton Times-Tribune.

For solution to the problem, see this.

Kudos to Nathan Benefield of Commwealth Foundation for the tip.


Pa House Members Use Per Diem


Pa House Members Use Per Diem To Buy Houses

Pa Employees Who Make 200K

There are 25 state employees with salaries over $200,000, not including all the bennies of course.

Twenty-three of them are involved in education with five  of them from the Pennsylvania Higher Education Assistance Agency (PHEAA); four of them  from the  Pennsylvania Public School Employees’s Retirement System, (PSERS); and three remarkably enough professors at Clarion University albeit the Clarion income includes compensation beyond base pay.

The jive 25 are:

1.  John C. Cavanaugh, chancellor of the Pennsylvania State System of Higher Education, $327,500.
2.  James Preston, president and CEO of the PHEAA, $320,000.
3.  Scott Miller, Washington lobbyist for the PHEAA, $290,000.
4.  Stephen Curtis, president of Philadelphia Community College, $277,584 (includes housing and car allowance).
5.  Alan Van Noord, chief investment office for the Pennsylvania Public School Employees’s Retirement System, (PSERS) $251,542.
6.  Tony Atwater, president of Indiana University, $244,620.
7.   Brian Hudson, executive director of the Pennsylvania Housing Finance Agency, $240,006.
8.  John Winchester, chief investment officer of the State Employees Retirement System,  $236,265.
9.  Alex Johnson president of Allegheny County Community College, $222,525.
10.Thomas R. Vilber, psychology professor at Clarion University, $217,882.
11. Brian Lecher, chief information officer at the PHEAA, $217,757.
12. Timothy Guenther, chief financial officer at the PHEAA, $217,757.
13. Angelo Armenti, president of California University, $213,000.
14. James W. Blake, professor at Clarion University,$209,841.
15. Edna V. Baehre, president of the Harrisburg Community College, $209,600.
16. Keith T. Miller, president of Loch Haven University, $205,136.
17. Robert M. Smith, president of Slippery Rock University, $203,930 .
18.William Buchanan, professor of library science at Clarion University, $203,621.
19. Javier Cevallos, president of Kutztown University, $203,484.
20. Francine G. McNairy, president of Millersville University, $202,831.
21. Kelly Logan, executive director of public service, PHEAA, $201,178.
22. Gerard Smith, managing director PSERS, $201,018
23. Mark Heppenstall, managing director PSERS, $201,018
24. James Grossman, managing director PSERS, $201,018
25.  Linda Lamwers, interim president of West Chester University, $200,000

Photos of some of them can be found here.

A list of other highly paid state workers can be found at this Pittsburgh Post-Gazette page.


Pa Employees Who Make 200K

Pa  Employees Who Make 200K