Stop the Union Pension Bailout; Oppose HB 2497!


     On behalf of the National TaxpayersUnion’s 17,000 members in Pennsylvania, I urge you to reject House Bill 2497,which would bail out public employee union pensions.

     Pennsylvania’s largest and mostgenerous public employee pension plans are severely underfunded and in need ofserious reform. In Fiscal Years 2009-10, Pennsylvania taxpayers paid $843million toward the Public School Employees Retirement System and the StateEmployees Retirement System. But starting in FY 2012-13, taxpayers will have tocontribute $5.3 billion, an effective increase of $1,360 in state and localtaxes per household, to maintain the systems.

     But instead of making necessary and prudentchanges, HB 2497 merely defers pension payments well into the future. By puttingoff payments, HB 2497 does not fix the plans’ underlying problems or save taxpayersmoney; it only makes the problem worse. In 14 years, taxpayers will have to paysubstantially more to sustain the system due to HB 2497’s risky assumptionsabout plan returns. In short, HB 2947 will force the children and grandchildrenof Pennsylvania’s current taxpayers to pay for fiscal irresponsibility they didnot cause.

     Instead of kicking the can down theroad, Pennsylvania should make real reforms to sustain its public employeepensions, such as moving to defined-contribution retirement plans. Thesearrangements, in which both employers and employees contribute funds, are moreaffordable and predictable. Defined-contribution plans like 401(k)s have becomethe vehicle of choice in the private sector and have been adopted by otherstate governments such as Alaska and Michigan. Further, an April 2010 pollshowed that 54 percent of Pennsylvanians support moving new governmentemployees into defined contribution plans.

     There is no question that Pennsylvania’s publicemployee pensions are in need of reform. But foisting payments onto the nextgeneration of taxpayers, as HB 2497 would do, is not reform; it’s recklessness.Our members are counting on you to do the right thing by rejecting HB 2497 andworking for real reforms.


StateGovernment Affairs Manager