Pa. Gen Theft Bill Passes

The Pennsylvanian Generation Theft Bill — termed by its supporters “needed pension reform” — was approved by the State House this afternoon 165-31. It goes on to Gov. Ed Rendell for his certain signature.

It was strongly supported by government unions such as the PSEA. A roll call of the vote can be found at this link .

The first time the House passed HB 2497 on June 16 the vote was 192-6. The Senate passed it Oct. 16 by a 41-8 vote, however, it tacked on  amendments which required a new vote in the House.

On Nov. 5,
lame duck  Speaker Keith McCall  announced that his assembly would be
quitting for the year which would require the process to start from
scratch in January under a Republican-controlled House.

Five days later, however, he changed his mind.

HB2497 attempts
to resolve the severe funding shortfalls of  Pennsylvania’s largest
pension plans — Public School Employees Retirement System (PSERS) and
State Employees Retirement System (SERS) — by deferring pension
payments and increasing the unfunded liability by tens of billions of

The bill makes some positive changes to the pension system such as doubling the amount of time to 10 years for a state employee to become vested; reducing the multiplier used to calculate pensions from 2.5 percent to 2 percent, and increasing the minimum retirement age for teachers to 65 from 62 and for state legislators to 55 from 50, it only applies to new hires

More importantly in provides for a re-amortization of existing debt over 30 years drastically increasing the interest cost.

Foundation notes that the pension obligations are expected to be $5.8
billion on the taxpayer by 2012 — a six-fold increase from today —
which  translates to a  $1,360 increase in state and local taxes for the
average homeowner. The data can be found on a link to a  pdf file on this page.

There had been hopes that a defined contribution plan akin to a 401K would be introduced as per a bill introduced in the senate, SB 566.

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