If you are even remotely interested in state politics, then you know that the General Assembly is poised to pass a pension reform bill that Governor Wolf has indicated he will sign.

And if you are interested in education policy, then you also know that rising pension costs are the number one issue keeping superintendents and school board members up at night.

And if you made it to this blog post and know about PennCAN, then you’ve probably heard that we released a report, published an op-ed, and shared some fancy animated infographics on this subject earlier in the week.

Our report has generated a lot of conversation. One common response has been something along the lines of: “Wait a second, your report makes a strong case that pensions are hurting district finances but SB1 (the pension reform bill) doesn’t promise any real savings. So how can you support that proposal?”

That’s the polite version of the question. The less polite version is: “This bill is a band-aid on a bullet wound. What the heck are you guys thinking?”

Fair questions. Here’s why PennCAN decided to add our voices to the pension debate and support SB1:

  1. The problem with the current pension system isn’t just that it strains districts’ finances; it’s also not all that beneficial for most teachers. Our report shows that many teachers are leaving the state or leaving the profession before they vest (10 years) and the overwhelming majority don’t stick around long enough to reach normal retirement age (age 60). SB1 opts new teachers into a plan that ensures some of those dollars are in a portable defined contribution plan. For a profession characterized by high rates of turnover, this is a good thing.
  2. The only way to create immediate meaningful savings for districts is to either: A) go back in time to the early 2000s and stop the legislature and the governor from making poor budget decisions; or B) reduce benefits for current employees and retirees. Option A violates the law of physics and option B violates the constitution. So let’s be serious for a moment. We were never going to get big savings.
  3. One aspect of the pension crisis that is within the locus of control for the legislature is risk management. Basically, how do we ensure that if there’s another recession the entire burden to maintain the public retirement system isn’t placed on taxpayers? On this point, Pew Charitable Trusts has said SB1 would mitigate more risk than any state that has enacted pension reform.
  4. Finally, you can’t talk about policy without acknowledging politics. The fact is a pension bill that didn’t provide a certain level of retirement security for current and future public employees wasn’t going to get done. We have to remember that there are thousands of public employees currently paying into the system to subsidize the pension of retirees. We owe it to PA’s current teachers and state workers to enact pension reform that ensures there is financial security for them when the time comes to retire.

If pension reform gets done this week, there will still be a pension crisis in Pennsylvania. But teachers and taxpayers will be in a much better place. Sometimes progress has to be incremental because the cost of doing nothing is worse than the cost of doing just a little something.

Speaking of which, how is that charter reform bill going?

Jonathan Cetel is the founding executive director of PennCAN. He lives in Philadelphia, Pennsylvania.


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