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Pennsylvania Pension Plan Booklet

Pennsylvania Pension Plan Booklet

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Published by PennLive
Pennsylvania Pension Plan Booklet
Pennsylvania Pension Plan Booklet

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Published by: PennLive on Jan 17, 2013
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 THE KEYSTONE PENSION REPORT
A DISCUSSION OF STRUCTURAL REFORM AND RELIEF TO PENNSYLVANIA’SRETIREMENT SYSTEM FOR LONG TERM SUSTAINABILITY
Fall
12
OFFICE OF THE BUDGET CHARLES B. ZOGBY, SECRETARY
 
 
 
1 
INTRODUCTION
L
ike the stone that locks an arch into place, Pennsylvania seeks a keystone—that integral
lock that can both secure the delivery of essenal programs and services to our more than12 million residents and make good on the state’s pension obligaons to public employ
-
ees. This keystone, in the shape of pension reform and relief, is essenal to addressing the
public funding crisis we now confront, which is being driven by rapidly rising pension costs.
Reform must pave the way to a future that enables us to provide sustainable support for thecore funcons of state government and fulll our consituonal mandates, while meeng ourpension obligaons to Pennsylvania’s state government and public school employees.Pension reform has become a key topic of discussion, news reports, and debate in nearly everycorner of the commonwealth. It is a queson on the minds of many, from members of theGeneral Assembly, public and school employees, school district directors and administrators,to rerees, business leaders, and even state and municipal nance rang agencies. As well,it is a queson increasingly on the minds of Pennsylvania taxpayers who ulmately bear thecost of the system through their tax dollars. All of these stakeholders, while represenngdiverse interests, recognize the crisis facing our state: that the commonwealth’s growingpension obligaons are crowding out funding for their children’s basic and higher educaon,public safety, health, human services, the maintenance and repair of roads and bridges,environmental protecon, and other core governmental programs.Governor Tom Corbe has vividly described this dynamic as a “tapeworm” or “Pac-Man”eang away at the state’s budget, an acknowledgment that growing pension costs are severelyundercung the commonwealth’s ability to fund essenal programs and services. Thoughno cure-all to Pennsylvania’s budget challenges, the scal reality is that absent meaningfulstructural pension reform, the state’s General Fund budget is on a very predictable path thatwill force a choice between either fully funding pension obligaons or making cuts to the corefuncons of government on which our cizens rely.The primary objecve of this Keystone Pension Report is to provide Pennsylvanians a fact-
based discussion of the funding crisis we now confront, describe the challenge the state faces
in meeng its obligaons to both our taxpayers and pension systems, and highlight the likelyoutcome for state programs and services absent meaningful pension reform. The Report isintended to provide nancial facts, highlight key issues, and advance the dialogue on meaningfulpension reform and relief, with a goal of creang a common framework around which soluons
can be structured.
This report is organized around the answers to the following quesons:
What are Pennsylvania’s statewide pension systems?
 
What created Pennsylvania’s pension problem?
 
What is the pension challenge in Pennsylvania?
 
What happens if we do nothing?
 
How can we create a framework for soluons?
PennsylvaniaFaces aPension Crisis
Currently, the
commonwealth
faces a $41 billionunfunded pensionliability. This
depletes moneyfrom educaon,
public safety,
health and humanservices and crical
infrastructure.
TABLE OF CONTENTS
INTRODUCTION ...............................1WHAT ARE PENNSYLVANIA’S
STATEWIDE PENSION SYSTEMS?
......2WHAT CREATED PENNSYLVANIA’S
PENSION CRISIS?
.............................3WHAT IS PENNSYLVANIA’S PENSION
CHALLENGE?
 ....................................7WHAT HAPPENS IF WE
DO NOTHING?
...............................11HOW CAN WE PROVIDE A
FRAMEWORK FOR SOLUTIONS?
....13SUMMARY .....................................14
GLOSSARY OF KEY TERMS
..............15APPENDIX ......................................16

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