The Pennsylvania School Boards Association today released its legal argument supporting changes that Gov. Tom Corbett has proposed to pensions for current state employees and teachers which it claimed are legal under the state constitution.
In a statement based on testimony of PSBA acting chief counsel Emily Leader before the House State Government Committee, the organization said the Pennsylvania Supreme Court allows changes to current employee's benefits under the Public Employee Forfeiture Act "if they were on notice of its provisions prior to accepting a new term of office, a promotion or new appointment."
That provision provides what the PSBA calls a "possible blueprint" for pension reform legislation. Ms. Leader told the committee that the General Assembly could create legislation stipulating when an employee accepts a new work situation, including a promotion, benefit, entering a new collective bargaining agreement or even accepting a pay raise as part of step movement on a salary scale, it would trigger the new pension rules.
Gov. Corbett's pension package proposed, among other things, moving new employees to a 401(k)-type plan and reducing the multiplier used to compute pensions from 2.5 to 2.0 for state employees and teachers in an effort to deal with the state's $41 billion pension debt.
He also proposed an increase in the penalty for employees who take a lump sum upon retirement.
The proposal also calls for changing the number of years used to determine an employee's final salary from the highest three years to the final five years, capping pensionable income to the Social Security wage base, which is $113,700, and capping pensionable income to 110 percent of the average salary four years prior to retirement.
The Pennsylvania State Education Association, the state's largest teachers union, has threatened legal action if changes are made to current employees pensions, claiming such a move would violate the state constitution.
The governor's office has maintained his plan would survive any legal challenges but has not offered a detailed explanation as to how it meets legal standards.
The PSBA statement offers the first glimpse of a legal defense of the plan.
The PSBA supports legislation that protects the pension benefits already earned by current employees but allows for changes to future benefits.
Ms. Leader said without meaningful pension reform school districts will be forced to cut programs and services for students in order to meet future pension payments.
Mary Niederberger: firstname.lastname@example.org or 412-263-1590.