Democratic Mayors Voice Support for Grove’s Pension Reforms
4/8/2014
HARRISBURG – Local governments are facing a more than $6 billion hole in municipal pensions, and it will only get worse unless action is taken in Harrisburg. With this in mind, Rep. Seth Grove (R-Dover) authored House Bill 1581 to address currently insurmountable municipal pension debts. The bill proposes a cash balance reform plan for our state’s municipal pensions. Today in Harrisburg, a bipartisan coalition voiced support for the bill and urged the House to pass it quickly.

“I am happy to welcome the support of leaders from both sides of the aisle who are staring this problem in the eyes every day,” Grove said. “A recent study by the state’s auditor general showed the Commonwealth is facing a $6.7 billion underfunded municipal pension liability. This can potentially cripple local governments, and my legislation is an important step in solving this problem.”

York Mayor Kim Bracey (D) thanked Grove for his continued support of this issue and his commitment to York City: “One year ago to the day, our very good friend and neighbor from Dover, Seth Grove, stood with me in York City Hall and committed himself to working with stakeholders across the state to address the municipal pension pandemic. Regional thinkers like Seth Grove understand that when a core community becomes sick, the entire region catches a cold.”

Lancaster Mayor Rick Gray (D) explained the financial drain pension costs have had on that city’s budget. “Pension costs in the City of Lancaster have hurt our budget and forced cuts to services, including public safety. Since 2007, police personnel expenses in Lancaster have increased by nearly 16 percent in spite of a 15 percent reduction in the number of sworn officers over the same time period. Likewise, fire personnel expenses increased by almost 20 percent, despite a 17% reduction in the number of firefighters. Not surprisingly, current police and fire personnel costs account for nearly 60% of the city's total budget. Without key reforms, such as House Bill 1581, local governments and taxpayers are strapped with crushing financial burdens.”

Gray added, “The coalition of supporters of House Bill 1581 is bipartisan and hail from every class of municipality. I may be a Democratic city mayor, but I am in lockstep with my rural Republican township counterparts and business community. We know that to solve big problems you first have to toss your party registration in the trash bin. The Pennsylvania General Assembly has to take the same approach. My hat is off to Leader Turzai, Grove and the Republican co-sponsors of this legislation. I encourage all legislators representing full service communities to join us.”

The office of the Pennsylvania Auditor General Eugene DePasquale, a former House member who represented the 95th District in York County, found our state is facing a $6.7 billion unfunded municipal pension liability. DePasquale voiced his support for Grove’s plan saying, “My report shows the municipal pension problem is just as widespread as the statewide crisis and, without changes, could push some municipalities into bankruptcy. The current system is not sustainable and municipal employees, including police officers and firefighters, deserve to know that the pension they are counting on will be there when they retire.”

House Majority Leader Mike Turzai (R-Allegheny) said that if lawmakers in Harrisburg were to address state-level pension distress, it would be a gross oversight to ignore the same problem plaguing cities, townships and boroughs across the state.

“I join Seth Grove and the dozens of local elected officials from across the state today to endorse the need to address municipal pension distress,” Turzai said. “I commend Grove for his work on House Bill 1581. We cannot fail to act. Only the state legislature can statutorily grant local governments the tools they need to control the costs of spiraling pensions. It is critical to ensure our communities are safe and fiscally sound.”

Highlights of the Grove reforms include:

• All current employees retain existing rights and benefits at current levels;
• For new hires only, shifts to a cash balance hybrid plan – a balanced and financially sustainable approach that includes aspects of both a defined benefit and a defined contribution plan. A hybrid plan, as designed here, also allows existing pension liabilities to be paid down over time and without the need for new revenue;
• Authorizes an optional 457 plan as an additional employee retirement tool;
• Requires pensions to be calculated on base pay and a small percentage of overtime. This will curb the practice of “spiking” or increasing final average salary with excessive overtime and unused sick/vacation days;
• Removes pension benefits from the collective bargaining process;
• Establishes pension plan portability options for new hires; and
• Improves job and pension security for uniformed unions.

One-third of Pennsylvania’s municipal pension plans are considered distressed and almost every county in the state has at least one municipality with a pension plan under a high level of financial stress. It is crucial to find a solution to this problem now, before the burden is passed onto property taxpayers.

House Bill 1581 is currently awaiting a vote in the House Local Government Committee.

For more information on Grove’s legislative goals visit www.repgrove.com or www.Facebook.com/RepSethGrove.

Representative Seth Grove
196th District
Pennsylvania House of Representatives

Media Contact: Mike Straub
717.260.6479
mstraub@pahousegop.com  
RepGrove.com / Facebook.com/RepSethGrove
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