HARRISBURG – On Tuesday, Democrats in the state House of Representatives proposed an estimated $1.8 billion increase in pensions for Pennsylvania government and public school retirees, but some Republicans argued that taxpayers would be taking an unfair financial burden. He claimed that he would be liable.
The bill was supported by all Democrats and passed 140-63.
The bill now heads to the Republican-controlled state Senate, where it also faces an uncertain future.
Gov. Josh Shapiro’s office declined to say whether Democrats would support the bill, but said it would continue to be considered as it moves through the chamber. The state’s teachers union praised the bill, calling it “long overdue.”
The bill’s sponsor, Rep. Steve Malagali (D-Montgomery), said during floor debate that the bill would help tens of thousands of pensioners struggling financially amid soaring inflation. He said it was a modest request.
“Our teachers and public servants deserve a retirement that reflects their contributions, untainted by economic hardship,” Maragali said.
Most House Republicans opposed the bill, saying the state was trying to help older, low-income Pennsylvanians by increasing property taxes and rent subsidies. They said pensioners receive social security, which is increased by cost-of-living adjustments to reflect inflation.
Rep. Brad Rohe (R-Crawford) said the bill is “so expensive that we can’t fund it in one year,” and that it would require local property taxes because school districts would have to pay for it. He said it could have an impact.
“I don’t mean to downplay anyone’s financial plight, but there are a lot of people who have never worked for the state, who have never worked for a school district, whose financial situation in retirement is not as good as ours. It’s much worse than the retired school employees and state employees who are aiming for ‘help here,”’ he said.
House Minority Leader Rep. Brian Cutler (R-Lancaster) recalled past operations of the state’s school employee pension system, including deferrals of payments and large increases in property taxes to compensate.
“Past General Assemblies have been using the public pension system for years like irresponsible teenagers with credit cards,” he said. “Unfortunately, it is the property tax payers who continue to pay the price for the mistakes of the past. And this is the important part: If this law is enacted in its current form, they will continue to pay. Let’s go.”
An estimated 69,000 pensioners would see their pensions increase by an average of several hundred dollars a month under the bill, for a total cost of nearly $1.8 billion, according to independent actuarial analysts.
The state must repay most of the money in 10-year annual installments, and the school district must repay a portion over that period.
More than 25,000 state government retirees are expected to see an average annual increase of $2,240 in their first year, and about 43,500 public school retirees are expected to see an average annual increase of $3,040 in their first year.
The average age of eligible state government retirees is nearly 80 years old, with an expected life expectancy of 12 years. The average age of eligible public school retirees is nearly 83 years old, and the average life expectancy is expected to be 10 years.
Unions supporting the reforms say pensioners who retired before 2001 have had their living costs not increased since then and have struggled to get by since inflation spiked two years ago. The 2001 law increased pensions for people who had not yet retired, but did not apply to those who had already retired.
All of the state’s large pension systems are underfunded. Senate Majority Leader Joe Pittman (R-Ind.) said in a statement that Congress will take a hard look at the bill with this in mind.
“I have real sympathy for those who retired before 2001 and this will be thoroughly reviewed,” Mr Pittman said. “Obviously we have to be mindful of the fragile nature of pension funds.”
The push to increase pensions comes as Pennsylvania’s state government is flush with cash after years of deficits. The company has about $14 billion in reserves, nearly a third of this year’s approved budget of $45 billion.
