McGinnis, Schemel and Others Reset Pennsylvania’s Pension Debt Clock
HARRISBURG – Joined by other pension reform advocates, Reps. John McGinnis (R-Blair) and Paul Schemel (R-Franklin) today took part in a news conference at the state Capitol to reset Pennsylvania’s Pension Debt Clock and call for a real solution to the public pension crisis. The clock, which is located in the East Wing Rotunda, was unveiled last year to bring attention to the Commonwealth’s growing and enormous pension debt.
“It’s not melodrama or exaggeration to say that this is the greatest financial crisis to face the Commonwealth in its history,” warned McGinnis.
The clock now displays the updated unfunded liability of Pennsylvania’s two public pension systems, the Pennsylvania Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS).
“When the pension debt clock was unveiled the unfunded pension liability was $63.7 billion,” said pension activist Barry Shutt, who came up with idea. “Today, it stands at more than $74 billion. That’s an increase of more than $10 billion in just 11 months, and reflects a ‘cost of doing nothing’ that should frighten all Pennsylvanians, and embarrass every member of the General Assembly and the governor.”
Public pension fund expert Richard Dreyfuss explained why the unfunded liability continues to rise.
“The debt is the result of several factors including chronic underfunding, subpar investment returns, retroactive benefit improvements and finally, periodic reductions in the expected long-term asset returns. Such trends are clearly unsustainable.” said Dreyfuss. “This growing debt has disturbing parallels to a legalized Ponzi scheme.”
“The pension crisis is going to have significant costs,” said Eric Epstein of Rock the Capital. “Either the taxpayers’ burden will be increased, or state programs, like education and infrastructure, will be slashed.”
McGinnis said a law enacted in 2010 to help resolve the pension crisis is not working. In the next few weeks, he plans to introduce legislation that will pay down the debt over a 20-year period.
“It’s a plan that will require the state and school districts to increase their payments in Fiscal Year 2018 by about $800 million, or about a 14 percent increase, but thereafter, annual pension costs would grow only in the 2-percent to 3-percent range,” McGinnis explained. “It won’t be the best-tasting medicine to be sure, but this approach will be 100 percent effective for what ails our pensions. It will also go a long way toward shoring up the Commonwealth’s credit rating and save enormous interest costs over the extended horizon. Most important, it will alter the course from our current path toward pension insolvency, whose consequences will be severe and irreversible.”
To view a video of McGinnis’ comments visit here
“What we need to do now is help our fellow legislators understand the immediacy of the problem and take the dramatic steps necessary to address it today,” said Schemel. “So that future generations won’t be saddled with this debt, a debt that will quite literally sink the ship of state.”
To view a video of Schemel’s comments visit here
The entire news conference will be available for viewing at RepMcginnis.com
Representative John McGinnis
79th Legislative District
Pennsylvania House of Representatives
Media Contact: Andy Briggs