CapitolBldgby Kate Giammarise, Pittsburgh Post-Gazette

You could call it a win, a compromise, or backing down. Or all of the above.

The pension reform bill passed by the Pennsylvania Legislature and signed into law by Gov. Tom Wolf last week makes more changes than unions would have liked and less than Republican advocates had sought.

Unlike past efforts at pension reform, this bill was not actively opposed by most Pennsylvania public sector labor unions, however.

“Labor did not throw bombs at this thing,” said David Fillman, executive director of the American Federation of State, County and Municipal Employees Council 13, which represents about 40,000 commonwealth employees, though he added that the union didn’t embrace the bill, either.

It garnered praise from a number of outside groups and passed both chambers with bipartisan support — by 40-9 in the Senate and 143-53 in the House.

Several union officials who did not wish to speak on the matter publicly said the bill that was eventually signed into law does not cut retirement benefits to future workers as dramatically as previous proposals, and, critically, they believe it takes the issue of pensions “off the table” politically — at least for a while.

It remains to be seen if that will be the case. Major bipartisan pension legislation also passed in 2010.

Some union officials have also said the bill gives Mr. Wolf a political “win” against a candidate whom labor views as an existential threat — Sen. Scott Wagner, R-York, whose opposition to public-sector unions is a large part of his governing philosophy. Mr. Wagner is seeking the Republican nomination for governor next year.

In a statement, Mr. Wagner criticized the bill Mr. Wolf signed as “watered-down” and also said the governor should have approved a pension proposal he vetoed in 2015 that would have moved all employees into a 401(k)-style plan. Mr. Wagner also criticized a provision of the bill that allows current lawmakers who are re-elected to remain in the old plan.

Because it only restructures for the future, critics of the plan have pointed out that it does nothing to pay off the existing $62 billion in unfunded liability for the two main funds, for state workers and public school teachers, though some past proposals didn’t do much to address this problem, either.

Pension overhaul proposals have been a fixture of the state Capitol since 2013, and unions had vigorously opposed bills that were discussed during the tenure of Mr. Wolf’s Republican predecessor, Tom Corbett.

Mr. Corbett spoke often about the cost of the existing pension systems and how billions of dollars in unfunded liability threatened the state’s budget. However, with narrower Republican majorities in both the House and Senate than exist now, he never succeeded in having either chamber pass a pension reform plan. In his final year in office, he even vetoed a portion of the General Assembly’s funding, in part because legislators had not delivered on making changes to the pension systems.

The bill signed June 12, which takes effect in 2019, does not impact current employees or current retirees. It also exempts corrections officers and state troopers from changes. Future employees will have a choice of several possible retirement plans, one of which is a straight 401(k) plan, and the other two are mixtures of defined benefit and defined contribution plans.

Mr. Wolf signed Senate Bill 1 into law in a ceremony in the Capitol rotunda, surrounded by Republican and Democratic leaders, calling it a “historic occasion.” He described the bill as “real and meaningful pension reform that is fair to workers and is fair to the taxpayers of Pennsylvania.”

Nina Esposito-Visgitis, president Pittsburgh Federation of Teachers, which did oppose the bill, said she is concerned that it won’t result in much actual savings, and that it could hurt recruitment of future teachers.

“We understood the need for a change. We respect Gov. Wolf’s work. This is a difficult one,” she said.

She was also quick to add that the changes the bill would impose were far less dramatic than what Mr. Corbett had proposed.

“I think that might be part of the reason [for labor support]. People remember what Corbett wanted to do to us,” she said.

 

As seen in Pennsylvania Chamber of Business and Industry’s Morning News. Story written by Kate Giammarise, Pittsburgh Post-Gazette: kgiammarise@post-gazette.com or 412-263-3909 or on Twitter @KateGiammarise.