Swift Action Needed to Address Municipal Pension Crisis, Lawmakers Say

HARRISBURG – Reps. Seth Grove (R-York) and Keith J. Greiner (R-Lancaster) today reinforced the importance of statewide municipal pension reform, in light of a report from Auditor General Eugene DePasquale which shows combined unfunded liabilities for the pension systems increased by $1 billion in just two years. 

“Municipal pension reform is something which I have been talking about for more than a year,” Grove said.  “I saw that in York, pension contributions were rising out of control and that the end result would be a tax on commuters, furloughs for police officers and firefighters, along with pension benefit reductions.  Unfortunately, those predictions for York have become reality.  There is no better example for the rest of the Commonwealth on why now is the time for reform.”

DePasquale’s report shows a total unfunded liability of more than $7.7 billion for pension systems across the state.  Furthermore, the report shows 562 municipalities out of 1,223 that administer pension plans are distressed and underfunded. 

“I applaud Auditor General DePasquale for recognizing the magnitude of this problem across the Commonwealth,” Greiner added.  “Without action to address the root causes of these unfunded liabilities, people across the state, not only in urban areas but also in the suburbs, will be paying higher taxes.  It is crucial that we as lawmakers come together to address this issue.”

Last session, Grove introduced House Bill 1581, which would apply to all townships and boroughs with full-time public safety personnel and all cities, except Philadelphia.  After a defined date, new hires would be placed in a defined benefit plan with a balance made up of mandatory employer and employee contributions and an employer-guaranteed interest credit.

Current employees would maintain all existing rights and benefits; however, these benefits would be frozen at current levels. Each municipality would maintain two plans until there are no more beneficiaries in the old defined benefit plan.  In addition, the legislation would have removed pension benefits from the collective bargaining process.

“This plan was supported by municipal leaders across the state, but didn’t get a vote in committee, let alone by the full House,” Greiner said.  “I plan to reintroduce Representative Grove’s legislation and hope that my colleagues, both Republicans and Democrats, can come together to address this growing problem.”

“People on both sides of the political aisle agree this is a major crisis,” Grove said.  “We need to create an affordable and sustainable solution which works for future generations.”

To read a copy of the report, visit www.RepGrove.com.