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August 29, 2013 | By | Posted in Legislature

Top senator: Axe pensions for private lobbyists

By Eric Boehm | PA Independent

HARRISBURG — A small group of private-sector employees, including a few lobbyists, are eligible for taxpayer-funded pensions in Pennsylvania.

Thanks to a decades-old ruling by the state attorney general, employees of the Pennsylvania School Boards Association, which represents the governing bodies of the state’s 500 school districts, can qualify for state pensions through the Public School Employees Retirement System, or PSERS. The Associated Press first reported the arrangement on Monday.

More than 100 current and former employees of the PSBA are members of the PSERS pension plan.

Senate Majority Leader Dominic Pileggi, R-Chester, on Wednesday voiced support for closing that loophole the next time the General Assembly takes up pension issues.

GETTIN PAID: It's well-known that state workers and public school employees get pensions, but employees at a nonprofit that lobbies on behalf of school districts get that perk too.

GETTIN PAID: It’s well-known that state workers and public school employees get pensions, but employees at a nonprofit that lobbies on behalf of school districts get that perk too.

Pileggi said the state’s two pension systems, which includes the State Employees Retirement System, or SERS, in addition to the larger PSERS plan, should not extend benefits to nonprofits that represent local governments.

“I don’t think they should be in the state employees’ system,” Pileggi said. “I think we can incorporate the resolution to that issue in whatever changes we make this fall.”

The state Senate is expected to tackle the broader state pension issue — including, possibly, the state’s $49-billion unfunded pension debt — when the Legislature returns to Harrisburg in late September.

The PSBA was granted the special loophole in the pension law by the state attorney general in 1939. At the time, the organization had just hired its first full-time employee.

But now the association has 72 employees in the PSERS system. Another 47 former PSBA employees are drawing retirement payments from the PSERS system, according to spokeswoman Evelyn Tatkovski.

State Rep. Glenn Grell, R-Cumberland, who is taking the lead on pension issues in the state House, said he was aware of the PSBA’s unique arrangement, but did not know there were so many employees and former employees in the system.

“As we’re looking at a comprehensive pension reform package, I think we should take another look at that,” he said. “We want to make sure that the reasons that were given in the 1930s are still true. And if they’re not, we should change things.”

For its part, PSERS has reviewed the legitimacy of the pension arrangement on several occasions, most recently in 1997 and again in 2005. Each time, the internal review has concluded that, under state law, the PSBA employees are entitled to a state pension.

And in some respects, the issue is small potatoes. After all, there are nearly 600,000 members in the PSERS system, including current workers, those collecting benefits and accounts that are inactive.

SMALL POTATOES: The 72 members of PSBA who get state-funded pensions are a tiny fraction of the 580,000 members in PSERS.

SMALL POTATOES: The 72 members of PSBA who get state-funded pensions are a tiny fraction of the 580,000 members in PSERS.

“When you look at things, the 72 members from PSBA are really a very small part of the whole pension system,” said Steve Robinson, a spokesman for PSBA. “It’s very small, we have a very small impact.”

Even so, the fact that highly paid private-sector employees — some of whom are registered lobbyists — have access to perks like public pensions is sure to raise a few eyebrows from the public.

And then there is the question of unequal benefits. It seems that PSBA is the only such organization in Pennsylvania with access to the state pension system for its employees. Other groups that similarly represent local governments do not get the same benefit.

But Corbett administration officials and House Republicans are less committed to shutting the loophole that allows PSBA employees to cash-in with a public pension.

“We are cognizant of certain classes of employees and we’ll work with the Legislature to determine the appropriateness of that situation moving forward,” said Jay Pagni, spokesman for Budget Secretary Charles Zogby.

Zogby has been the most vocal member of the Corbett administration pressing for pension changes. But Pagni said the focus is on big-picture issues like the long-term solvency of the plan, which is barely affected by the 70-or-so PSBA employees included in the PSERS plan.

Corbett and legislative leaders on both sides of the aisle have discussed the need for a pension reform measure before next year’s budget. What that package would look like is subject to considerable debate.

Robinson said the special carve-out would not affect how PSBA approached pension issues. The group would lobby for the interests of its members — Pennsylvania’ 500 school districts — regardless of how those changes might affect the association’s special perk.

Boehm is a reporter for PA Independent and can be reached at Eric@PAIndependent.com. Follow @PAIndependent on Twitter for more.

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Eric Boehm is a reporter for PA Independent. He can be reached at Eric@PAIndependent.com or at (717) 350-0963.

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