A Democratic caucus from the Pennsylvania state Senate unveiled a proposal in March aimed at reforming pension rules and helping school districts avoid rising payments.
State Sens. Jay Costa (D-Allegheny), John Blake (D-Lackawanna), Anthony Williams (D-Philadelphia), Vince Hughes (D-Philadelphia) and Larry Farnese (D-Philadelphia) presented the proposal during a briefing with Capitol news correspondents.
The plan would refinance $9 billion of the $50 billion in underfunding in the state Employees' Retirement System and Public School Employees' Retirement System. It would also reform state pension law to prevent charter schools from receiving excessive reimbursements.
Additionally, the proposal would lower state and school district payments to provide short-term relief and, ultimately, simplify management of future cost increases.
"The pension reform plan we are suggesting is smart and innovative," Costa said. "It saves money and creates a plausible responsible fiscal roadmap for the future. Refinancing $9 billion in existing unfunded liabilities would decrease long-term payments by $24 billion. Over the next five years, it would save school districts $600 million and the [state] $1 billion."
The lawmakers said they put forth the proposal as an alternative to the plan proposed by Governor Tom Corbett (R-Pa.) that would add $5 billion in pension liabilities and $2 billion in additional payments over the next four years.
"The Corbett administration has already refinanced billions in debt to make a bad situation better when it floated nearly $4 billion in bonds to restore Pennsylvania's unemployment compensation reserves in 2012," Blake said. "We must do the same with pensions."
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