HARRISBURG – Leaders of Pennsylvania’s two largest public employee unions Friday vowed a court fight if Gov. Tom Corbett and lawmakers approve reductions in future benefits for current state workers and school employees.
The officials from the Pennsylvania State Education Association and Council 13 of the American Federation of State, County and Municipal Employees said case law makes it clear that any benefit rollbacks for active employees would violate the state constitution.
They said they hope to avoid a legal showdown by convincing legislators that neither benefit changes nor the creation of a defined-contribution option, as an alternative to the current defined-benefit plan, is likely to have much effect on the $41 billion unfunded liability of the State Employees’ Retirement System and the Public School Employees’ Retirement System.
The taxpayer tab for the fiscal year that starts July 1 is expected to total $2.2 billion.
Pension reform is among the major themes Corbett is expected to cover in his budget address to the Legislature Tuesday.
The Republican, who made a 2010 campaign pledge not to increase taxes, has expressed concern about ballooning pension costs squeezing funding for other important programs in a state budget of less than $28 million this year. He has said he may seek to reduce benefits not yet earned by employees and to overhaul benefits for future hires.
“Whatever he comes out with Tuesday is not necessarily what’s going to occur,” said David Fillman of the AFSCME council, which represents 65,000 employees of state, county and municipal governments in Pennsylvania.
The unions, however, are willing to work with Corbett to find sources of revenue to help the state with the cost, PSEA President Mike Crossey said at a news briefing in Harrisburg organized by the unions. The PSEA’s 187,000 members include about 120,000 teachers.
Pennsylvania’s pension woes began with passage of a 2001 law that granted retroactive rate increases to state workers and teachers, and even larger increases for lawmakers. A subsequent restructuring of taxpayers’ contributions delayed the true cost for another decade while the funds’ investments were hammered by the last recession.
In 2010, lawmakers passed a law that reined in benefits for new hires and extended the unfunded accrued liability further into the future to ease the increase in the taxpayers’ cost.
Steve Nickol, a former Republican legislator who now works for the PSEA, said teachers nearing retirement are disturbed by the speculation about benefits being scaled back.
“As the governor has turned his attention toward the benefits for current members of the system, I find that I’m talking people who are in the range of retirement off the ledge,” Nickol said. “It has created a high level of anxiety.”