OP-ED: Pa. lawmakers use pensions as bargaining chip
As a social worker, I help those lost in a personal or family crisis. Even the most well-educated and intelligent people often don't know where to turn when faced with an unexpected financial crisis. It's critical they get the facts. Rash decisions will only make things worse.
That's the danger many of our state legislators are in right now with the pension issue. Their bad decisions created a pension funding problem. Now they're rushing untested ideas that will make the situation worse for taxpayers and hundreds of thousands of workers.
Like the pension issue, my job is an emotional one.
Along with my co-workers, mostly women, I talk to people every day about their lives. Most of them are struggling to make ends meet. We take pride in educating them about where to get help: state programs, church soup kitchens, clothes from a local charity. We help them achieve their goal of self-sufficiency.
I love helping people. But the work can be stressful, and you end up taking that home with you.
We do our jobs to the best of our ability and we expect our state legislators to do the same. That's not happening.
Instead, some legislators are using the retirement security of hundreds of thousands of workers and retirees, as well as the potential to increase costs for taxpayers, as a bargaining chip in budget negotiations.
It started when a convoluted and confusing 410-page pension bill was rammed through the process in less than a week. Even independent financial experts hired with taxpayer dollars warned that time to review the plan was "insufficient to perform a complete review" and their report "should be considered preliminary in nature."
Politicians ignored that warning and within minutes began voting on the bill.
Now, as the House takes up this bargaining chip, the full cost of the legislation is seeing the light of day.
The bill, known as Senate Bill 1, cuts retirement for current teachers, firefighters, social workers and other public employees by 24 percent to 28 percent. For younger workers, the bill closes the pension system, cutting their retirement by an astonishing 70 percent.
So what does the state get from those cuts? The bill does almost nothing to pay down the pension debt — which the legislature created — any faster. To make matters worse, the bill is unconstitutional. Legislators are deliberately going down a dead end where everyone loses.
That's not reform or savings.
Worse still, experience in other states show that decimating retirement for future generations could increase costs.
We need look no further than the disastrous results in Alaska, Michigan and West Virginia. According to a recent study from the National Institute on Retirement Security, Alaska began forcing new hires into 401(k) plans in 2005. Within eight years, the low populated state's manageable pension debt doubled and Alaska was forced to infuse an additional $2 billion into the system.
In Michigan, despite a pension surplus, the state forced new employees into a 401(k) system starting in 1997. It's proven to be a terrible move. By 2012, pensions were only funded at 60 percent.
The most alarming real-world example is West Virginia. After closing its pensions for 401(k)s in 1991, pension funding plummeted to only 25 percent. After careful study, the state reopened the pensions to save money.
Lost in all of the rhetoric is that historic pension reform in 2010 is working. Five years ago, workers made deep sacrifices and the state finally stopped diverting contributions to their employees' retirement. As a result, the state is addressing concerns of bond rating agencies with progress that is "nothing short of dramatic" according to Pew.
At the same time, workers are — as they always have — contributing a significant portion of our incomes toward our retirement.
In the end, teachers, social workers and other public workers simply want to do our jobs helping those in need and serving the communities where we live. No worker in Pennsylvania should be made an enemy or be used as a bargaining chip in the budget games in Harrisburg. Certainly not for a pension cutting plan that legislators know ultimately won't fix the pension debt.