Week in review: A ‘nightmare’ pension problem, schools ask for more funding
By PA Independent Staff
It’s no secret Pennsylvania has a big pension problem, but this week brought increased attention to perhaps a more dire situation — the struggle of local governments to meet their obligations to retirees.
In other happenings, a state representative is taking on a tough battle about lawmakers’ hiring practices, while Pennsylvania’s state-related universities made their annual plea for increased funding.
Here’s a round-up of this week’s coverage:
Taxpayers’ public pension nightmares worse than they seem
While Pennsylvania lawmakers try to find a foothold on the $47 billion unfunded liability in two state-level pension plans for public school employees and state workers, another potential pension crisis is unfolding in small towns, mid-sized boroughs and large cities across the Keystone State.
LOOKING BACK: Pennsylvania’s auditor general warned the state’s local municipalities are facing a dire pension problem.
Eugene DePasquale, Pennsylvania’s auditor general, on Wednesday pointed to the growing municipal pension crisis. All told, 573 of the 1,218 municipalities in Pennsylvania have underfunded pension plans totaling more than $6 billion in the red.
“Some pension plans are so underfunded that promised retirement commitments are at risk. If they fail, the cost will be passed onto the taxpayers. This liability can truly become every taxpayer’s nightmare,” he said, calling for action from state and local officials.
State officials are more concerned with state-level pensions because they have a direct impact on the annual budget.
Taxpayers have reason to be concerned. Municipalities with underfunded pension plans will have to increase property taxes, and some may have to create a direct “pension tax” on residents’ earned income to pay the bills, DePasquale warned.
PA universities expect state or students to pick up tab on rising tuition
Pennsylvania’s four state-related universities are set to receive flat-funding this year, according to Gov. Tom Corbett’s proposed budget.
With no change in the dollar amounts from last year’s appropriations for the Pennsylvania State University, the University of Pittsburgh, Temple University and Lincoln University, the schools say they will have to pass rising costs onto students.
State legislators, however, are concerned about the educational outcomes and workforce preparedness of those undergraduates being asked to pay more.
“It just seems like once students leave the college, we’re not clear on the statistics. Where do the students go, what jobs do they get?” asked state Sen. Jim Ferlo, D-Allegheny, minority vice chairman of the Senate Appropriations Committee at its hearing Tuesday.
Lawmaker: Local hires being used to protect incumbents
State Rep. Kevin Haggerty, D-Lackawanna, knows he might be fighting a losing battle, but he still wants lawmakers to stop hiring local government officials to their district offices.
Haggerty views such hires as part of an incumbent-protection program. His main concern is that local officials could use their positions to curry favor for their lawmaker bosses.
“If you’re up there giving jobs out every day and contracts, but you’re also working for a state elected official, then you can be telling everybody in power, ‘Hey, listen, make sure you take care of this guy or this girl,’” Haggerty said.
Adding an interesting political layer to the debate, Haggerty is running against another Democratic incumbent from Lackawanna County because of redistricting. It just so happens that his opponent, state Rep. Frank Farina employs a Throop borough councilwoman in his local district office.
Though Throop isn’t currently in Haggerty’s district, it will be up for grabs in the upcoming primary.
Philly schools will end another year in red
The School District of Philadelphia seeks $320 million to invest in its ambitious Action Plan 2.0, but continues to operate with such persistent fiscal mismanagement that it will end the year with a negative balance.
According to the district’s chief financial officer, Matthew Stanski, even with gap closing measures, Philadelphia public schools will carry a $14.2 million deficit into 2015.
“There’s a lot we can work on together regardless of your position on any particular issue, including the fact that we don’t control our revenue, we only control our costs,” responded Commissioner Bill Green, the new chairman of the School Reform Commission.
Corbett’s budget banks on Medicaid waiver
For the sake of Pennsylvania taxpayers, Department of Public Welfare Secretary Beverly Mackereth better be correct in her belief that the federal government won’t toss Corbett’s request for a waiver from Medicaid expansion.
That’s because Corbett is counting on $125 million in savings connected to the waiver, which if granted would allow the governor to move forward with his Healthy PA Medicaid reform plan.
While Mackereth is hoping for a quick decision, the Centers for Medicare and Medicaid Services — an agency within HHS — on Monday offered no indication as to how it’s leaning.
“We have received Pennsylvania’s waiver request and look forward to working with the state as we review their proposal,” spokeswoman Emma Sandoe said.
DPW chief: Pennsylvania saves millions fighting welfare fraud
In other DPW news, Pennsylvania has saved almost $2 billion staving off welfare fraud, waste and abuse under Corbett, Mackereth said.
Mackereth stressed that while some recipients “game” the system, Mackereth said, a majority plays by the rules.
“What we find is that most people are doing the right thing. They are not trying to commit waste, fraud and abuse. However, because those few take advantage of the system, we have to have some protections in place so that the truly vulnerable who are entitled to benefits get it, and those that aren’t, don’t get it.”
Most of the savings, $1.1 billion, came from cost avoidance — or stopping welfare fraud before it happened.
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