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Representative says pension reform proposal is 'phony'
By William Kibler
bkibler@altoonamirror.com
At a town hall meeting in Altoona Thursday, state Rep. John McGinnis, R-Altoona, made clear how he feels about the machinery in which he is a cog.
"We have a very lousy state government, frankly," the Altoona Republican said.
Prompted by questions from his audience of about 30 at the Altoona Area Public Library, McGinnis expanded on that theme in connection with several subjects.
Returning to a frequent bugaboo, he spoke of the state's $75 billion pension shortfall, and a reform proposal he called "phony."
McGinnis has said that before the system is reformed, the state needs to pay off the shortfall -- a 20-year plan he has outlined.
If the state does nothing about that shortfall, its two pension programs will run out of money within 15 years and the obligation to pay benefits will fall entirely on the state's general fund, eating up 40 percent of it annually, he said.
That would be a financial disaster, especially considering the state's perennially precarious financial situation, he said.
The longer the state waits before beginning a serious payoff program, the worse the situation will get, he warned.
The state has been compounding the pension problem by paying an inordinately high management fee of $700 million a year, he said.
It could pay 2 percent of that and get a better return with an index fund, he said.
The proposed reform, which offers new employees a three-way choice between a pair of programs that combine defined benefits and defined contributions and a third program that is a purely defined contribution, does nothing to reduce the growing debt, he said.
It's further flawed in that the options would encourage those employees who don't plan to stay long to go with the defined contribution plan, leaving the defined benefit components with only long-termers, which is financially unworkable, he said.
Legislators have been trying for an easy way to fix the problem, because their focus is on the next election and 15 years from now is several elections away, according to McGinnis.
"(But) there's no easy way," he said. "The problem is fast getting away from us."
An inadequate $6 billion pension payment -- not enough to cover the annual interest -- is part of a proposal for next fiscal year's budget, which introduced another bugaboo.
An impasse between Gov. Tom Wolf and Republicans in 2015 and 2016 led to a nine-month delay in getting a budget passed, leading to anguish in many quarters.
The budget will probably be passed by the end-of-June deadline this year, but that may be because state leaders don't want to be embarrassed to ask for campaign donations prior to an election year when they convene in December for the Pennsylvania Society's annual Holiday Dinner in New York, he said.
The budget may be on time, but it won't be balanced, so he won't vote for it, McGinnis said.
The budget deadline and the state's habit of coming up against it or worse create a systemic problem for school districts, because they too need to pass their budgets on the same schedule, McGinnis said, after audience attendee Lois Kaneshiki, chairman of the Blair County Republican Committee and member of the Hollidaysburg Area School Board, brought up the subject.
School boards have a hard time because they don't know how much they'll be getting from the state, a prime funding source, she said.
"Did I mention that state government is not run well?" McGinnis asked rhetorically. "I'm fully sympathetic to the aggravation."
What about reassessment? asked Steve Elfelt, a local activist who previously lived in Michigan, where the state performs reassessments annually to ensure they keep pace with market value.
Since Blair County reassessed for the first time in nearly 60 years this year, Elfelt pays far more in property tax, which shows how radically he was undertaxed previously, he said.
State Sen. John H. Eichelberger Jr., R-Blair, is a member of a commission that is evaluating assessment issues, McGinnis said.
One of the proposals the commission may consider is a state takeover of the process, McGinnis said. "There is a movement to fix (the problem)," he said.
McGinnis himself brought up how long the state Division of Vital Records takes in providing birth certificates.
Last year, when he sought his own, it took from May to September, he said.
It's unconscionable, given that keeping such records is clearly a government responsibility and clearly routine.
His office is conducting an "experiment" that he hopes will alert the right people to the problem, whether it's short-staffing or mismanagement or both, he said.
McGinnis agreed with an audience member who called for the state to cede control of its state-run university system.
Government has no business providing money for -- let alone operating -- institutions of higher education, McGinnis said.
It leads to bad behavior, he said.
He spoke of a state university employee who, during his campaign for the General Assembly, criticized his incumbent opponent.
The incumbent went to the challenger's employer and asked it to silence the employee, and the university tried to comply, he said.
"That is corruption," McGinnis said.
It was also a trespass on the employee's right of free speech, he added.
Government should quit subsidizing higher education, so universities can engage in a purer pursuit of truth, he said.
More basically, it's wrong for the state to reach into taxpayers' pockets to benefit those trying to educate themselves, he said.
If you asked a university, it could justly claim to do wonderful things with the money the state provides but so might a bank robber, he said.
Elfelt brought up gerrymandering, the tortured drawing of legislative district boundaries to ensure the party in charge of drawing those boundaries gets maximum representation in the General Assembly.
It lets the ruling party "put its thumb on the scale," Elfelt said.
"I don't know what the fix is," McGinnis said.
There are some areas where one party is simply dominant, he said.
But there's certainly a problem, he said, citing the 2012 elections in which, out of 228 General Assembly seats, only one had both a competitive pair of primaries and a competitive general election.
"To me, that says there are too many safe seats," McGinnis said.
McGinnis has floated a proposal for gerrymandering reform.
As with education and the marketplace, more competition is good, he said.
Mirror Staff Writer William Kibler is at 949-7038.