McGinnis misplaces blame for pension crisis
On Oct. 7, Rep. John McGinnis made public his views on the state pension “crisis” during a meeting of the Altoona Area school board.
But his statements raised far more questions than answers and provided no real practical solutions.
The bottom line is that the ideas McGinnis shared for drastically overhauling Pennsylvania’s Public Employee Pension System (PSERS) are already proven failures in other states and would simply pass the debt on to Pennsylvania’s taxpayers.
McGinnis suggested that all pension funds should be rolled into US Treasury Securities. But treasury securities don’t even halfway meet the 7.5 percent return PSERS is required by law to maintain. A fact check revealed rates as low as 3.41 percent for 20-year treasury securities.
McGinnis reaffirmed his belief that all new public pensions should be switched from defined benefit plans to defined contributions as a way of saving taxpayer dollars.
However, several PA actuarial firms concluded that this plan would cost taxpayers $40 billion more over the next 30 years.
PSERS would be forced to lower its investment return rate by 2 percent to make up for fewer employees in the plan, and thus taxpayers would have to make up the difference.
In fact, three states have already switched to defined contribution plans, and all three saw huge debt increases to their pension systems.
Despite McGinnis calling PA actuarial firms “phonies,” seven additional states reached the same conclusion that defined contribution plans cost citizens far more money, not less.
It was also troubling that McGinnis admitted he was not sure what groups belong to the state pension system.
This is a significant concern, considering that the Representative has already co-sponsored legislation to drastically alter the plan, seemingly without knowing the identities of the workers that comprise it.
Finally, McGinnis attempted to blame the school funding crises in Harrisburg and Philadelphia solely on teacher pensions, without mentioning the nearly $1 billion that Gov. Corbett and the legislature cut from public school funding.
Facing reduced state dollars, local school districts have been forced to furlough teachers, increase class sizes, cut programs and absorb a larger share of all costs.
The legislature created this problem by preventing public schools from contributing to the pension fund for years, and by excessively borrowing from the fund to finance other government ventures.
The legislature should solve this mess, not the taxpayers.
(The writer is an officer in the Altoona Area Education Association.)