2010-05-20 / Front Page

Eichelberger Holds Townhall Meeting Here

Pension fund crisis a hot topic
By Chanin Rotz-Mountz STAFF WRITER

Even though state budget talks are already under way for the next fiscal year, state legislators have more pressing concerns to address, including the fact the commonwealth is expecting to be hit with a $1.35 billion shortage by next month.

Sen. John H. Eichelberger Jr. of the 30th Senatorial District touched on the current and upcoming financial crunch before a crowd of two dozen local residents during last Tuesday’s town meeting held at the Fulton County Library.

“Things have gone from bad to worse ..., ” the senator said. “We’ve been seeing the revenues in our current budget come in short every month.”

Three decisions have already impacted the commonwealth financially and will continue to do so in the immediate future, according to Eichelberger. Among those losses in revenue are $100 million in gambling money resulting from a casino not being constructed in the Philadelphia area; $472 million in money from the failure to toll Interstate 80; and $800 million that must be paid back into a restricted account known as M-Care.

“To make matters even worse, we’re facing the pension crisis,” said Eichelberger of the large pension funds involving state employees and public school employees. “Both of these funds are in trouble and underfunded right now.”

Under questioning by local resident Betty Shelley, Eichelberger shared with the crowd that there will be a spike in the required contributions in 2012 even though the projected figures are “fluid” and changing in accordance with the market. Currently, the state contributes an average of one-half billion dollars annually to the state employee pension fund. The spike or raise will bring the state’s required contribution to $4 or $5 billion yearly, resulting in the “state being short a lot of money,” he noted.

“School districts are going to be in the same situation. Their pension fund is larger than the state pension, and they’re going to be short more money,” said Eichelberger, who added state taxpayers will be responsible for half of each pension deficit. At least 40 other states as well as municipalities are currently in the same situation with their pension fund contributions.

The pension funds, Eichelberger stated, are primarily underfunded due to the performance of the stock market. Two other factors linked to having contributed to this situation include having excess money in the fund in 2001 and the subsequent approval for increased benefits, and a COLA increase for retirees shortly thereafter.

“In 2012 it’s coming due. It won’t be a spike but a spike and plateau. It’s (the contributions) going to go up and stay up. It’s going to stay level for close to five years ... . It’s going to be a long time until we get out from under the pension problem,” he concluded.

In response to comments that money was not put into the fund on several occasions, Eichelberger pointed out the returns were “so great” for a number of years, actuaries determined employer contributions did not need to be made.

“Would you admit that if school districts had been required to pay a normal contribution, the spike would not be as high as what it is,” questioned retired Forbes Road High School teacher Richard Price.

“It was really a windfall to the school districts,” said Knobsville resident Ray Anderson, who pointed out issues that should have been taken into account at that time were “need and expectancy.”

Fred Gunnell, owner of Antietem Iron Works, returned to the pension topic later in the town meeting on May 11 and asked if there was a “sense of entitlement” with the two sectors involved. Eichelberger stated several bills have been proposed that could change the future of the pension fund and briefly spoke on a defined contribution system.

Additional issues discussed at the meeting were reasonable health insurance for municipal employees; MCare fund; the proposed tolling of I-80; state sales taxes as it relates to items such as clothing; municipal fees for state police usage; and healthcare.

Other residents on hand to give and hear comment were Jackie Yates, John and Mary Jane Leck, Dan Swain, Homer Ansell, Leroy Vickroy, Jack Hendricks, Donald R. Bard, Ron Mitchell, Charlotte Ford, Daniel Adams, James and Danelle Gunnell, Stanley Kerlin, Lee Armstrong, Ray Messick, Don Rosenberger and county Commissioner Bonnie Mellott Keefer.

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