Pension Problems Pack The House Sunday in TT

It is a crisis years in the making. Now the taxpayers of the T/E School District and the Commonwealth of Pennsylvania are faced with a huge bill that's come due.

Pennsylvania public school teachers and many other public employee union retirees are entitled to a pension with fixed benefits. The problem is that paying those benefits depends on a thriving, if not roaring, stock market in an economy that is anything but robust.

It's a topic that's a little wonky, frankly. In the end, it all comes down to money, the potential for new taxes and of course, politics.

Concerns over how to pay the pensions of current public employee retirees and the best way to control the costs for the future were big enough to pack the house on a dazzling sunny Sunday in the middle of NCAA March Madness, at the .

State Representative Warren Kampf (R-157) spent about an hour outlining the details of the problem and his ideas for reversing the situation over time. He then took questions for another 90 minutes inside Keene Hall (where the Tredyffrin Township Board of Supervisors meet).

The Problem: We've Run Out of Road

Richard Dreyfuss, an actuary and Senior Fellow with the Commonwealth Foundation for Public Policy Alternatives summed up the complex issue by referencing an editorial on the issue in the Harrisburg Patriot News, telling the crowd of about 90 that "we've kicked the can down the road...(now) we've run out of road."

The immediate problem is that the T/E School District and virtually every other public school district in the state is paying more and more each year to pay "fixed" benefits to retirees.  Fixed benefits mean that no matter what a pension plan earns by investing in stocks, bonds and other financial vehicles, the pension plan pays out a fixed benefit each year. The result is that when the stock market and economy are weak, the state and local school boards must make up the difference.

Kampf, who voluntarily takes no pension from his legislative job, says he'd like to see that system shift from fixed benefits to fixed contributions. Kampf's proposal would not affect current retirees or employees currently covered by a fixed benefit plan. It would affect future hires by guaranteeing the state would pay in a certain percentage of public employee salaries....but not assuring the payouts. In other words, if the stock market tanks, taxpayers would not be left holding the bag for making up the difference. That is the system used by many private employers who offer 401k retirement plans.

Kampf emphasized that current retirees would not see a change in their plans under a bill he is working on in Harrisburg.