- Associated Press - Wednesday, May 6, 2015

HARRISBURG, Pa. (AP) - Republican senators want to end Pennsylvania’s debt-ridden pension plans for state and public school employees and require concessions from many current workers to provide immediate taxpayer savings, according to details released Wednesday.

The plan is the Senate Republican majority’s top priority this legislative session and is designed to whittle down the estimated $50 billion pension debt that they view as the state’s most pressing financial problem.

Senate Republican leaders have insisted that their plan be considered in wide-ranging negotiations with Democratic Gov. Tom Wolf over fixing state government’s large projected operating deficit.

Senate Majority Leader Jake Corman, R-Centre, said the proposed overhaul will protect taxpayers from another huge pension debt, help maintain a robust retirement benefit and modernize an outdated system to make it more affordable.

“It’s like a tsunami. When the tsunami’s out 100 miles away from shore, it kind of looks pretty, this big wave,” Corman said on the Senate floor. “But when it hits land, it does a lot of damage. This pension problem has hit land. It’s time to address it. Just sitting back and paying the bill, that’s a lot to ask the taxpayers.”

The affected would include rank-and-file state employees, teachers, state troopers, lawmakers, judges, top executive branch officials and state university staff members. Senate Republicans hope to introduce the legislation, receive an actuarial analysis of the plan and pass the bill by the end of next week.

Democrats contend that the Republican plan punishes workers for decisions made by policymakers to postpone pension fund payments and run up a massive debt.

“Every time we have a crisis, every time we have a problem, we look to solve the problem on the backs of workers,” Senate Minority Leader Jay Costa said.

Costa, D-Allegheny, said Republicans are ignoring changes already made to address the pension debt and ignoring competing proposals to create savings by refinancing a portion of it.

Wolf opposes ending the traditional pension benefits.

In a statement Wednesday, a Wolf spokesman called the debt “the direct result of more than 15 years of Harrisburg politicians underfunding the plans” and stuck by Wolf’s plan to save $8 billion over 24 years by refinancing part of the debt.

Under the Senate Republican plan, the traditional pension promised to about 700,000 active employees, retirees and beneficiaries would cease to exist for people who are hired or elected in the future. Instead, they would get a 401(k)-style plan - with a 3 percent employer contribution for school employees and a 5 percent contribution for state government employees - and a cash balance plan that would earn up to 4 percent interest.

Concessions also would be sought from current employees. A similar strategy has been dismissed in the past by top Republican lawmakers as too legally risky should it be challenged in court as a breach of contract. Under the plan, many of the 370,000 current employees would be asked to contribute more money to maintain the benefit terms they were granted under a 2001 law for future years.

“The question remains whether we legally can do that,” Costa said.

But Corman countered that the move is legally innocuous and simply resets benefits to a previous level.

Winning concessions from current employees would theoretically provide immediate savings to the state government and school districts in the face of rising annual pension fund payments required by a 2010 law designed to account for years of policymakers delaying obligations.

Long-term savings would result from the state’s making on-time pension fund payments, Corman said, though he acknowledged that shutting the traditional pension plan to future employees may deliver a bump in near-term taxpayer obligations. The actuary’s analysis will address that cost, he said.

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