Ciresi introduces legislation to pay down unfunded liabilities in state pension systems
HARRISBURG, May 9 – State Rep. Joe Ciresi, D-Montgomery, yesterday introduced legislation (H.B. 1137) to pay down the unfunded liabilities in the state and school employees’ pensions systems using state surplus funds to relieve tax burdens on local taxpayers and school districts.
“While our teachers and state employees deserve the retirements they were promised, the unfunded liabilities in our state pension systems – accumulated years and decades ago – increases costs for our taxpayers and school districts as we work to pay that down,” Ciresi said. “My bill would help provide relief by using our state’s surplus funds to reduce these unfunded liabilities, saving taxpayers money in the long term and speeding up progress on addressing our public pensions.”
According to Ciresi, the state pension systems— the Public School Employees’ Retirement System and the Pennsylvania State Employees’ Retirement System —generate billions of dollars for the economy every year. In 2020 for example, PSERS and SERS supported about 55,000 jobs and provided about $1.2 billion in state tax revenue.
Although the pension systems provide a yearly financial windfall, local taxpayers and school districts are required to pay down the pension systems’ unfunded liabilities. These payments significantly increased since pension reforms in 2010 which, in addition to reforming benefits, prompted expanded pension contributions from public employers to pay down existing pension debt. These contributions are set to decline as the pension debt is reduced.
Ciresi’s legislation would save taxpayer money and support investment in state and local economies by using state surplus funds to reduce these unfunded liabilities. The Rainy Day Fund would pay $670 million to PSERS and $330 million to SERS. Recent data from the Department of Revenue has shown that state revenues for the 2022-23 fiscal year have come in $1.2 billion ahead of estimates.
“According to models from the last two fiscal years, this cash infusion could reduce Pennsylvanians’ tax burden, via employer contributions, by approximately $2.1 billion ($1.462 billion for PSERS and $656.4 million for SERS) over the next two decades,” Ciresi said.
“As Pennsylvania’s Rainy Day Fund is at a record high and tax revenues so far this fiscal year have been coming in over $1 billion ahead of estimates, we can be fiscally responsible by using surplus state funds to pay down our pension system debt. The investments we make now when our budget is healthy will put us in a stronger financial situation in the years and decades to come.”