Screwed Again!

Welcome to Tom Corbett’s Pennsylvania! The state where people who don’t cause the problem are nonetheless punished.

If you are a public employee in Pennsylvania, you had better listen to the pension reform proposal released today because you will be bailing out the people who didn’t pay their fair share over the last decade. You know that little retirement contribution that they take out of our checks on a biweekly basis? Well, to my knowledge they never gave me a vacation from paying that in the last 23 years that I have been in education. Seven point five percent every check. Bet most of you didn’t know that there were years that the state and the school districts didn’t pay anything. In the years from 2001 to 2010 the school districts and the state combined to contribute an average of 4% while teachers were paying themselves and average of 7 percent. The handshake with state employees required that all three parties pay equal shares. So what happened? Someone didn’t understand that you can’t beat the stock market forever. They should have bought Nate Silver’s book.

Now, the pension system is over 40 billion dollars underfunded. So Mr. Corbett’s plan is to put that on the backs of the people who were paying their fair share all along. You can keep your 2.5 multiplier if you pay more or you can pay the same and work seven and half more years to get the same benefit. And of course, the employers’ (state and district) contribution won’t change fast enough to make up the difference. With a cap of 2.25% increase per year, it is still less in one year than it will cost state employees.

There are some other gems in there too as we again cut into the people who serve our state, the Corbett administration plans to cut corporate income taxes as well as raise the cap on the amount of loss a corporation may claim in a year.

My guess is that this is another cog in the Administration’s machine that will eventually privatize education in Pennsylvania. In my graduate class we have failed to mention yet when educators and state employees became the dregs of the earth.

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5 thoughts on “Screwed Again!

  1. Jeff, with all due respect, I would like to share a few observations. Having worked with very many state employees as they transition into retirement, I have gained an appreciation for just how generous the pension fund really is. For starters, a retiree can begin drawing benefits at a very early age – usually their mid 50’s. With today’s longer life expectancies, it is quite possible for a retiree to draw a pension for more years than they actually spent working. Secondly, at the time of retirement, the employee’s contributions usually add up to $100-$150k, which is far less than any private sector employee would have to save to get the same income in retirement (a retirement that typically starts 10 years later don’t forget). That is because the state employee is promised a monthly income of $3000-$5000 for life by the state (i.e. taxpayers). There is a financial calculation called Present Value that tells us what the value of that promise is, and it is around $1 MILLION per employee. Multiply that by the thousands of state employees retiring each year and it’s easy to see the state simply cannot sustain that level of generosity forever. Giving current employees the choice between retiring in their 50’s (and paying more), or paying the same (and retiring in their 60’s) doesn’t se unreasonable to me

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    • One thing I know for certain is that when someone starts a communication “with all due respect,” what follows will be most likely be disrespectful. You do have some good points but you missed mine. It what’s the state employees who quit paying into retirement it was the employers – the state, the state agencies and the school districts.

      When people choose to work in the public sector there is a trade off – An excellent pension plan for the limited monetary benefits received during employment. In the private sector if you bust your ass and become the best that you can be at whatever it is that you do, you will be rewarded monetarily. In the public sector being the best that you can be at what you do gets you the same raise as the guy who takes naps in his cubicle. The best teacher you ever had made the same salary as the worst. The best lawyer that you know most assuredly does not make the same salary as the worst.

      I don’t disagree that it’s time to raise the retirement age. What I am saying is that when we were hired we entered into a commitment with the state and now that commitment is about to be broken. When the state gets hit with money problems, the first place that the governor looks at is the public sector. Again cutting funding to the public sector while cutting taxes to private corporations.

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  2. Thanks for writing this. I’m late to the game with figuring out what’s been happening with pensions but I’m trying to do that now.
    To reiterate the point about giving away money to private corporations, PA has tripled corporate tax breaks over the past decade, to the tune of $2.4 billion in 2012 alone. While Corbett’s deep cuts to education and other public goods make these tax breaks even more egregious, it’s worth noting that this is a longer-term trend of disregarding people’s needs in favor of corporate profits.

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