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Summer 2010
House of Representatives
COMMONWEALTH OF PENNSYLVANIAHARRISBURG
Dear Neighbor,I hope you’ve been enjoying some cool respites in the midst of the summer heat. May you find many ways toenjoy all that a Lancaster County summer has to offer (not the least of which would be the delicious bounty from theroadside stands and farm markets!)
The State Budget
As you may have seen in news reports, Pennsylvania has a state budget for the 2010-11 fiscal year. The appropria-tions bill was passed in the House and the Senate by the constitutionally mandated deadline of June 30; however, Gov.Ed Rendell signed it about a week later.Though I’m happy that Pennsylvanians didn’t have to endure a saga like the 101-day late state budget in 2009, thefinal plan failed to earn my support for several reasons:- This budget relies on more than $2.7 billion in stimulus funding from the federal government. Of that, $850 millionhas not yet been authorized by Congress, and recent efforts in Washington to move that legislation forward have comeup short. In other words, it’s balanced on the premise of money that we do not have. If the federal funding doesn’tcome through, someone is going to have their funding cut.- Although the budget does not require any new taxes to balance, it creates a “structural deficit” of at least $3 bil-lion that will have to be addressed in the next fiscal year. This only heightens the necessity of state government gettingserious in reining in expenses now so that next year’s cuts won’t have to be as stark.- The budget does not meet necessary fiscal obligations to fund state pensions (see more on this issue in the pensionarticle on page 2), thereby fueling the reality of unsustainable employer contribution rates.- The “balanced” budget is predicated on financial commitments from an as-of-yet instituted tax on natural gasincome from the Marcellus Shale. This action is based on the same misguided precedent that was set by counting onincome from table games. Basing financial practices on income that does not yet exist is simply not sound planning.
What I’m Working On in Harrisburg
With confidence that the constituent support in my district office is maintained at excellent levels by staff, I have been able to spend increased time forging progress with some of Harrisburg’s most chronic issues.As GOP vice-chair of the House Finance Committee, I have a louder voice on many of the topics that translate intoa sharper focus on one of Pennsylvania’s most pressing needs:
job creation
. I’ve also been named Pennsylvania’sdelegate to the National Conference of State Legislators’ task force for streamlined sales taxes. And, also in this news-letter, I update you on my appointment to the Commonwealth Health Care Reform Implementation Advisory Commit-tee. Love it or hate it, the federal health care reform plan is moving forward – and I’m grateful to be a voice on how itgets implemented in Pennsylvania.The tasks aren’t simple, but I strive to continue to be a common-sense voice on issues that face the Legislature. Pleaseknow that I count it a continuing privilege to serve you in the Pennsylvania House of Representatives. I welcome your comments and suggestions on how my staff and I can be of the utmost service to you. Please don’t hesitate to email,call or stop by my office. Best wishes for an enjoyable close to your summer season!Respectfully,Scott W. BoydState Representative, 43rd Legislative District
Eggs & Issues Breakfasts are great ways to hear what’shappening in Harrisburg. Rep. Boyd speaks to a recent gathering at Willow Valley. Make sure to check the schedule of upcoming breakfasts on page 4.
www.RepBoyd.com
House Approves Public Pension Reforms
Specifics on Proposed PensionSystem Reforms
The following is a summary of House Bill2497 amended to reflect reform measures being proposed to the state’s pension systems (SERSand PSERS).
Changes would impact only “new hires” and would not affect the benefits of cur-rent SERS and PSERS members.
The reform measures include:- Rescinding Act 9 (2001): Benefits providedto employees under Act 9 would be rescindedfor all new members beginning January 1, 2011for SERS and July 1, 2011 for PSERS. Effectivedate for new legislators would be December 1,2010. None of the changes would apply to theJudicial Branch.
SERS Members (Class A-3)
- Accrual Rate (Multiplier) for each year of service will be 2% of final average salary. Thisrate will apply to both legislators and state em- ployees. The current rate for legislators is 3%;for state employees the rate is 2.5%.- The employee contribution rate will remainat 6.25% for state employees. The rate for newlegislators will drop from 7.5% to 6.25%.- New members of SERS have a 45-day periodwhere they may opt into a new Class A-4, whichwould provide an accrual rate of 2.5% with anemployee contribution rate of 9.3%.- Vesting periods will increase from five toten years for all new SERS members.- Retirement age increases by five years fromthe current retirement age for all new members.- No Option 4 (lump sum payout) will be per-mitted for new members upon retirement.
PSERS Members (Class T-E)
- Accrual Rate (Multiplier) for each year of service will be 2% of final average salary. Thisrate will apply to public school employees. Thecurrent rate for this group is 2.5%.- The employee contribution rate will remainat 7.5%.- New members of PSERS have a 45-day period where they may opt into a new Class T-F,which would provide an accrual rate of 2.5% withan employee contribution rate of 10.3%.- Vesting periods will increase from five to tenyears for all new PSERS members.- Retirement age increases to 65 with 3 yearsof service. The current provisions allow retire-ment at age 62 with one year of service. Keepsretirement age consistent with SERS.- No Option 4 (lump sum payout) will be per-mitted for new members upon retirement.- House Bill 2497 calls for an employer con-tribution rate of 5.64% for PSERS. The actuarialrate certified by PSERS is marked at 8.22%.The amendment would include a provision that provides a window for the employer contributionrates, noting that they cannot be less than 5.64%, but also no more than 8.22%. The exact rate will be subject to the amount approved in the finalstate budget for fiscal year 2010-11.The House recently approved a public pension reform bill that wouldfulfill the state’s obligations to current workers and retirees while takingsteps to reduce the long-term burden on Pennsylvania taxpayers.The legislation aims to smooth out what has become a potentially crip- pling crisis resulting from Act 9, a 2001 law that increased pensions for state workers and school employees but left taxpayers on the hook for a bill that would come due in 2012.The reforms are aimed at two pension systems: the Public School Em- ployees’ Retirement System (PSERS) and the State Employees’ RetirementSystem (SERS). These pension systems are funded primarily through threesources: employee contributions, employer contributions and investmentreturns. The state makes the employer contribution for the state workers’ pension system. The state and local school districts make the employer contribution for the public school teachers’ pension system.Due to a combination of investment downturns and the global economiccrisis, as well as increasing benefits for current employees and retirees for retired employees, the state and local school districts are facing a sharpincrease in employer contributions to the pension funds in the next fewyears. In fact, as noted in my last newsletter, it is estimated that as muchas $5.9 billion will be needed to cover the unfunded pension liabilities of PSERS and SERS.As co-chair of the House Republican Pension Task Force, I’ve beenworking with legislators on both sides of the aisle to find some startingsteps to addressing this looming crisis. The changes included in HouseBill 2497, the bill that recently passed in the House by a vote of 192-6,would “smooth out” those increases (similar to a home re-financing) whilealso implementing pension benefit reforms, resulting in short-term relief and long-term cost reductions for taxpayers.House Bill 2497 would not reduce pension benefits for these currentemployees and retirees in the two systems. In actuality, the U.S. Con-stitution and the Pennsylvania Constitution prohibit making changes to pensions for existing workers and retirees due to contractual law.Furthermore, the House bill also would implement pension reformsfor future state workers and teachers. These reforms include increasingthe amount of time a teacher or worker must be employed before they areentitled to certain pension benefits. It also increases the amount of timethey must serve before they can retire.Finally, future employees must choose to pay higher sums of their sala-ries in order to qualify for the same pension benefits available to current pension system participants, or they can pay the same percentage of their salary into the pension system, but receive smaller pension benefits.And under House Bill 2497, new legislators would cease to receive thespecial treatment that had been afforded them under Act 9.Together, these reforms stand to benefit taxpayers and protect current pension plan participants.If something is not done to address this looming crisis, Pennsylvaniafamilies could be facing a massive tax increase. While House Bill 2479will not solve all of the problems facing our state pension systems, I sup- ported it because I believe it is an important first step toward keeping thesystems healthy without placing a greater burden on Pennsylvania taxpay-ers. You have my commitment to continue working to guide legislativeaction through difficult challenge.The bill is currently in the Senate Finance Committee for consideration.
Rep. Boyd questions a testifier at a recent hearing on pension issues.
An Important Effort in Makingthe State Budget ProcessMore Fair and More Workable
Pennsylvania is one of only 14 states that do not have any typeof non-partisan fiscal office. The absence of this office under-scores a painful issue that has cropped up in each of the budgetnegotiations under Gov. Ed Rendell: under the current system,the governor is the only one who can certify the Commonwealth’srevenue numbers. A major component of the bogged down budget negotiations in recent years is the governor’s failure tocertify a revenue number in a timely fashion, or his certificationof an amount that is wildly higher than estimations provided byeither the House or Senate...a move that consistently leads toeven more wrangling.In the fiscal code passed with the 2009-10 state budget,language was included to create an independent budget office.State Senate Finance Committee Chairman Pat Browne (R-Le-high/Monroe/Northampton Counties) fought for that office to bewritten into law in this year’s budget negotiations. That discus-sion will continue when the Legislature returns to session in thefall. Specifically, Browne’s legislation directs the creation of anon-partisan, bicameral, legislative arm to research and provideinformation on fiscal matters.I’m hopeful that the institution of such an office would helpto fend off at least a few of the endless sticking points that canmake state budget negotiations so arduous.
In the Forefront of Implementing theFederal Health Care Plan in Pennsylvania
Late this spring, I was appointed to acommittee tasked with properly imple-menting all aspects of the recently passedfederal health care plan in Pennsylvania.Specifically, I’m serving with BucksCounty Republican Rep. Katharine Wat-son as appointed representatives from thePennsylvania House Republican Caucusto serve on the Commonwealth HealthCare Reform Implementation AdvisoryCommittee. The Committee was estab-lished by an executive order from Gov.Ed Rendell in May.Love it or hate it, the federal health care plan spearheaded by President Barack Obama is now law and its impact is com-ing down the pike. Each state has to examine how its manyfacets will be implemented. I’m honored to have a seat at thetable when decisions are made about how this will work inPennsylvania.According to information released by the governor’s office,the panel on which I will serve is charged with five primarytasks:- designing the optimal program-matic model for the state’s ‘high risk pool’(adults who have been denied coveragedue to their pre-existing condition).- designing the optimal organizationalmodel to support a customer-friendly andefficient health benefit exchange.- identifying all technology, organiza-tion and process improvements necessaryto support the implementation of all stateobligations under the new law.- preparing a strategic plan for theimplementation of the new law.- identifying legislative action necessary to enablefull implementation of the new law and draft legislation for discussion with appropriate members of the Legislature.My focus will be to serve as a taxpayer guardian in thiseffort. Clearly, the intent of this legislation is to expand cover-age to those now uninsured, but I plan to do all I can to steer things in such a way that we are, in fact, lowering the cost of health care for everyone.
Legislative Updates: Online and On Demand
Have you had a chance to check out my Legislative Update videos? Topics from this year range from coverageof the farm show, to help with finding the lowest electric rates, to an overview of an industry-changing recycling program at a local business.You can watch these updates in one of two ways:
Head to
RepBoyd.com
, and hit “video” under the latest news tab. All of the shows are listed there.
If you’re a Comcast customer, you can watch them through your On Demand menu.Choose
“Get Local,”
then
“Government,”
then
“State House”
and choose my videos from there.
In honor of Dr. Seuss’s birthday in early March, Rep. Boyd was invited to read at various schools in the 43rd Legislative District as part of Read Across America Week. Here, Rep. Boyd calls on inquisitive young mindsat Fritz Elementary School in the Conestoga Valley School District.
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