November 17 – The Pennsylvania House of Representatives on Tuesday passed legislation that would provide a cost of living adjustment (COLA) for retired teachers and public servants who retired before a certain year.
It would be the first time in 20 years that an increase will happen for this group.
The bill would boost pensions as much as 15 to 24.5 percent for about 69,000 retired public school educators and other state employees in the state.
The House passed the bill on a 160-43 vote. It now goes to the Senate and ultimately has to be signed by Governor Shapiro before going into law.
Michele Jansen of NewsTalk 103.7FM pointed out there would be a “$1.8 billion dollar cost to this. It sounds like something nice to do. But it also seems to me, it’s put forth by Democrats in the House who keep putting forth the bills, regardless of how much they cost or regardless of how difficult they are to enact. This one is for pensioners who aren’t benefiting so much from today’s increases. To me, this seems so irresponsible. Again, 1.8 billion, you’re going to add that to Pennsylvania’s bottom line? This is going to hit taxpayers and especially for the school districts who are also going to be responsible for part of this cost.”
Attorney Clint Barkdoll said, “This is complicated, and it’s not clear what the Senate is going to do with this. So this is largely PSERS, public school employee retirees, pre-2001. Why is that important? Well, 2001 is when the whole PSERS retirement system changed. The retirement benefits got much more lucrative post 2001. What happened was, and I don’t know if this was an oversight at the time or what, but if you were a PSERS retiree pre-2001, you’ve not received a cost of living increase now in 20 plus years.”
Those people are essentially in their 80s or 90s right now.
Barkdoll continued, “These aren’t just teachers. These are cafeteria workers, janitorial workers, and staff people. A lot of these pensions are actually very small. They’re very nominal. This issue has come up over the years in Harrisburg, something needs to be done with this group of people. The flip side of that is what you just said. So on one hand, I think everyone agrees there ought to be some cost of living increase for these people. Some of these pensions from this group are really small. I mean, we’re talking like hundreds of dollars a month, but the flip side is as the independent fiscal office is pointing out and others, this is not at no charge. We know that Pennsylvania already has these deficit issues in the future. There was that group we talked about a few weeks ago, they’re projecting a massive budget deficit a few years down the road and the question is, is this a good way to expend what currently is surplus state money?”
These would apparently be one time cost of living adjustments.
Barkdoll noted, “But obviously once that happens, that’s increasing the fixed costs going forward, even though this is a very old group of retirees, who knows how much longer many of them will still be drawing on those plans. I’m really curious to see what the Senate does with this. There has been some bipartisan support for this over the years, but will there be the votes in the Senate to pass it?”
Jansen said, “As one of the representatives said, there’s a lot of people who are suffering from what’s going on with inflation and not having any pension plan or generous pension plans, and I think at the time there still were advantages in the public system that most of the private sector did not have, in terms of how many years you had to work before you could get your retirement. The fact that these people are living decades and decades, that’s also a drain in a pool on something that was never adjusted to realistically reflect our longer lifespans. So this to me it’s buying votes. They’re just saying, who has the deficit now and who can we give this to? Yes, everyone feels like things should be more fair, but we know that the pension systems went ridiculously generous after 2001, so now we’re going to give it to all the people pre that because they didn’t get to benefit from that? This makes no sense to me. If we don’t have people, especially our public sector employees actually experiencing the results of the terrible policies many of them are voting for, we don’t get any correction of policies when you keep bringing in enough voters who are benefiting from these policies where other taxpayers have to suffer and pay more and more and more. This just makes no sense to me. We just cannot afford it is the bottom line.”
Barkdoll said, “That has to be part of the discussion. Both of these things can be true that the people in the Senate can say we are sympathetic to these elderly retirees that have never got a cost of living increase in this time and that’s not fair, but at the same time, we can’t afford it. That’s got to be part of the discussion. The other interesting footnote about this, when that pension system changed in 2001, were some deals that Governor Ridge made, at the time this was really controversial because the commentary and the analysis was that the new pension plans were way too lucrative. Well, that actually turned out to be true. The new plans that were implemented in 2001, the state had to retire, sunset those plans, I believe around 2009. So if you were hired during that window, you’re grandfathered in and locked into this very lucrative defined benefit plan, but then everyone that came on board in roughly 2009 after, gets a much less generous plan. So there’s all these gradations within the plan itself. Some employees if they were hired during the right window of time, they’re going to make out very, very handsomely. Other hires that were hired after those dates, they have more of that hybrid plan where it’s some defined benefit and some aspect where they are making a contribution like a 401 K style plan.”