Legislation to Pay Down Pension Debt Earns Support from IFO

From PA Chamber of Business & Industry

It’s been relatively quiet over the last several weeks on lawmakers’ plans to address Pennsylvania’s bloated and unsustainable public pension systems. However, earlier this month the state’s Independent Fiscal Office filed an actuarial note to a bill (H.B. 778) that would tackle the pension crisis in part by paying off the current unfunded liabilities of the State Employees Retirement System ($19.5 billion) and the Public School Employees’ Retirement System ($42.7 billion) within about 20 years.

The actuarial report projects increased costs in the short-term with the potential for “significant” long-term savings. It indicates that under H.B. 778, PSERS contributions would initially increase by 17 percent, and then by approximately 35 percent until the unfunded liability is satisfied. SERS initial contribution would be about $90 million lower for the first five years, after which they would be higher than the estimated contribution rates under current law until the SERS unfunded liability is satisfied. All told, these provisions could save as much as $18 billion.

The IFO notes in its report: “The projections show that the savings over the entire projection period are much more significant on a cash flow basis than when they are measured on a present value basis. This occurs because the bill shifts the timing of employer contributions to pay down the unfunded accrued liabilities, and the savings that occur at the back of the projection period are valued much lower when measured by current dollars.”

In its review of H.B. 778, Milliman – the actuarial firm used by the IFO – voiced support for the bill’s reduction of the amortization period (the length of time it will take to pay down the unfunded liability) because it would help to improve security, protection from adverse experience and intergenerational equity.

Lawmakers on both sides of the aisle offered some level of praise for the bill, with House Majority Leader Dave Reed, R-Indiana, saying, “I think John [Rep. John McGinnis, R-Blair, who sponsored the legislation] has done an excellent job of putting together half a proposal, on the accelerated payments, but, obviously, we’ve got to see the other half of his proposal of how we would make those additional payments up front.” In a Capitolwire story, House Democratic spokesman Bill Patton praised McGinnis for his focus in paying down the pension debt. “The 2010 law that it’s in place now [Act 120] has a schedule for paying the pension debt, but it could be done faster if larger chunks of taxpayer funds are redirected …. House Democrats are open to workable ideas that use sustainable revenue sources to pay off the pension debt.”

PA Department of Labor & Industry to Conduct Series of Free Safety Webinars

The Bureau of Workers’ Compensation Health & Safety Division of the Pennsylvania Department of Labor & Industry will conduct a series of free safety webinars during the month of June. Titled PATHS (PA Training for Health and Safety), the series will cover a wide range of topics including emergency action plans, social media safety, workplace violence, industry-specific safety and much more. 

For a complete list or to register, visit the PATHS Training Calendar

Montour County Readdressing to Begin Next Month

Residences and businesses that will be impacted by Montour County’s readdressing will begin receiving information in the mail this month. The first of three mailings will be a checklist which will include updating driver’s license and vehicle registration information. Pending final approval by the Postal Service, address change information will be mailed and are scheduled to take effect in June. The Post Office will continue to deliver to the old addresses for one year. Any location that does not receive a notification in the mail by mid-July and would like to confirm address information should contact the Columbia Montour GIS office at 570-387-4930. Montour County intends to begin using new addresses for 911 dispatch on August 1, so it will be important to have the updated information by then.

The Montour County Commissioners hosted the first of four public information sessions last Wednesday to discuss readdressing as a result of 911 consolidation with Columbia County. Three more sessions are scheduled. The next is Wednesday, May 24, at 7 p.m. at the Anthony Township Municipal Building, followed by May 25 at First Baptist Church of Danville and May 31 at St. Peter’s United Methodist Church in Riverside. Information, including the checklist and schedule of future meetings, is available at MontourCo.org. 

PA Chamber Supports UC Reform Bill

From PA Chamber of Business & Industry

PA Chamber Government Affairs Director Alex Halper advocated in favor of legislation that would clarify and strengthen language within the state’s Unemployment Compensation law last week at a public hearing of the House Labor and Industry Committee. House Bill 1014 defines “willful misconduct” (i.e. the circumstances under which a firing triggers ineligibility for UC benefits) and clarifies that an individual whose separation from employment was due to “voluntary leaving work without cause of necessitous and compelling nature” is only eligible for benefits if he or she quits for reasons attributable to the job or workplace.

Halper explained to the committee that part of the reason these changes are necessary is to preserve the UC system for who it is truly designed to help – individuals who lose their job through no fault on their own for a temporary basis as they search for new employment. The bill will also help address problems with the administration of the UC system and service centers – of which the funding and function has recently been the subject of much scrutiny – along with challenges that have strained the UC Trust Fund for years.

“The problem is that the term ‘willful misconduct’ is not defined within the statute, which gives overly broad discretion to those tasked with resolving eligibility disputes and too often leads to benefits being granted to individuals fired for reasons that would lead an objective observer to almost certainly conclude should be disqualifying,” Halper said. “Unfortunately, we hear frequently of employers in this precise situation: a former employee whom they were forced to fire for good cause still manages to qualify for benefits … everything from chronic absenteeism and altercations with fellow employees to the individual arriving at work clearly under the influence of illegal drugs.” To make matters worse, those employers’ taxes increase as a result because tax rates are partially based on experience.

While not a panacea for addressing Pennsylvania’s myriad UC system problems, the PA Chamber supports H.B. 1014 because it will help to provide specific statutory guidance and clarification to help dictate decisions, remove unpredictability in the system and allow for a quicker, more uniform approach to dispute resolution.

The bill still awaits action by the House Labor and Industry Committee.

Work to be Done on State Budget

House and Senate lawmakers return to Harrisburg for session this week. With less than two months until the end of the Fiscal Year, they will have to take into account the state’s $1.2 billion revenue shortfall and incorporate that reality into their plans for spending in 2017-18. The law requires that the budget must be balanced; therefore, further cuts to spending, new taxes or other proposals to generate revenue will be necessary to close the gap. The House awaits Senate action on H.B. 218, the budget vehicle they passed a little more than a month ago that relies on gaming expansion and liquor reforms to generate new revenue, which the Senate Appropriations Committee could take up as early as this week.

On Friday, Senator John Gordner expressed concern about gaming expansion generating significant new revenue. He feels gaming in Pennsylvania may be at a saturation point, and that further expansion may result in reduced lottery proceeds for senior citizen programs. His comments were made at the budget breakfast sponsored by the Joint Governmental Affairs Committee of the Chamber and Columbia-Montour Visitors Bureau held at The Greenly Center in downtown Bloomsburg. Representative David Millard and Harold Hurst from Rep. Kurt Masser’s office also participated.

Jennifer Reis, Manager of Government Affairs with the PA Chamber of Business & Industry, provided an overview of $32.2 billion budget proposed by Governor Wolf, as well as the $31.5 billion spending plan advanced by the House. While the Governor’s budget did not address the state’s public pension crisis, Senator Gordner believes that legislation to provide a long-term solution will be advanced and signed by the Governor. As the state Supreme Court would likely declare any changes in benefits to existing employees unconstitutional, a solution for immediate relief is unlikely.

Senator Gordner and Representative Millard felt confident that a budget bill will be provided to the Governor by the June 30 deadline.