New Castle News

All About You ...

November 27, 2012

Our Opinion, Part I: Pennsylvania faces tough choices in covering retirement costs

NEW CASTLE — With his current term reaching the halfway point, Gov. Tom Corbett is preparing his political agenda for the next two years.

And because many of his priorities deal with budget matters, they are, by necessity, interrelated.

But one area highlighted by the governor and his staff during a session yesterday with journalists from Community Newspaper Holdings Inc. newspapers — including the New Castle News — was Pennsylvania government’s pension problem.

The problem with pensions is relatively simple. The state is dealing with the consequences of unrealistic finances with its pensions that have lasted for more then a decade. As a result, the state’s two major pension funds for commonwealth employees are significantly underfunded — to the tune of $41 billion.

How did this happen? You can go back to around 2000 for the answer. At that time, a raging bull market on Wall Street had persuaded some people that upward growth was consistent and inevitable. The state’s pension funds were flush. So why not boost benefits?

The answer came in the form of serious shocks to the stock market, particularly around the Sept. 11, 2001, terror attacks and the economic slide known as the Great Recession. Suddenly, all the anticipated pension money wasn’t there.

And rather than deal aggressively with the problem, Pennsylvania — like many states — chose to downplay it, perhaps hoping the market would roar back and conceal some reckless choices.

That hasn’t happened. While the situation with stocks has improved, the gains haven’t closed the pension gap. Most attempts to address pension issues in Pennsylvania since 2001 have merely delayed the day of reckoning, not helped the situation.

And as is the case with most government pensions, Pennsylvania’s consists of what are known as defined benefit programs. That means regardless of how the market performs, state government retirees receive a guaranteed benefit.

Who makes up the shortfall in state pension funds if the stock market fails to perform as hoped? Look in the mirror. Responsibility falls to taxpayers.

Pennsylvanians may take some comfort in the fact Corbett continues to oppose any tax increases in the state. But pension costs must be covered. And with pensions being a substantial area of the budget, with expenses rising faster than anticipated revenues, that produces consequences.

Specifically, rising pension expenses squeeze out other government programs. Doing nothing with state pensions will eliminate desired funding in other areas.

That creates an incentive for Republicans and Democrats alike in Harrisburg to hammer out meaningful pension reform. We’ll look at some of the options tomorrow.

Text Only | Photo Reprints
All About You ...
  • Hudson.jpg Culinary Conversation: Think globally, cook locally

    Another set of bookshelves might be necessary at my house very soon. It’s been a bountiful week. Edie Majesky of New Castle, who I have known most of my life, is aware of how much I love collecting old cookbooks.

    April 19, 2014 1 Photo

  • Ramsey.jpg Dave Says: Problems with no credit score?

    “Dave Says” is a weekly column featuring financial advice from nationally syndicated radio host Dave Ramsey. His column is filled with timely, relevant questions and answers taken from actual letters and calls on Ramsey’s radio progam, “The Dave Ramsey Show.”

    April 18, 2014 1 Photo

  • Brothers.jpg Lori Brothers: Play with names — not with your food

    Do you remember being told, “don’t play with your food” when you were a child?  Or maybe you’ve said this to your own children or grandchildren. I’ve heard stories about kids slipping food under the table to the dog or stuffing Brussels sprouts into their pockets to get out of the pain of eating them.

    April 17, 2014 1 Photo

  • stright.jpg Sarah Stright-Hartley: A T-shirt dress can be a three for all

    I love finding pieces that can be worn for just about every portion of my life.  From daytime, to work, and then on a date with my husband, I like pieces that can go the distance.

    April 16, 2014 2 Photos

  • ivy_bday.jpg Kali Davies-Anderson: Happy birthday, Miss Ivy!

    This week I would like to take time out of my usual ramblings to wish my second born daughter, Ivy, a very, very happy first birthday!

    April 15, 2014 2 Photos

  • Olszak.jpg Heartbleed raises the stakes on Internet security

    My column last week dealt with Internet and related scams, along with steps people can take to protect themselves. Today’s column could be termed Part 2 of that topic, albeit from a different angle.

    April 14, 2014 1 Photo

  • Hudson.jpg Lugene Hudson: Celebrate Easter like Helen Martin

    What’s cookin? That’s one of our favorite questions at Culinary Conversation. We love when readers share some of their favorites. This week, Helen Martin of New Castle stepped up to the plate to answer that question regarding Easter dinners.

    April 12, 2014 1 Photo

  • Ramsey.jpg Dave Ramsey: You can’t borrow way out of debt

    “Dave Says” is a weekly column featuring financial advice from nationally syndicated radio host Dave Ramsey. His column is filled with timely, relevant questions and answers taken from actual letters and calls on Ramsey’s radio progam, “The Dave Ramsey Show.”

    April 11, 2014 1 Photo

  • Brothers.jpg Lori Brothers: Wellness a growing trend among those over 50

    The power of choice that the explosion of Internet information has generated is moving us as a culture in a direction to examine who we are and what we really value.

    April 10, 2014 1 Photo

  • stright.jpg Sarah Stright-Hartley: Some perfect fits for heading back to work

    I'm heading back to work soon and I've really been thinking about my work wardrobe — especially because I'm hoping most of it still fits my post-baby body.

    April 9, 2014 2 Photos

House Ads

What is your favorite Easter treat?

Jelly beans
Chocolate ... bunnies, crosses, anything that’s chocolate!
Marshmallow peeps
Decorated eggs
     View Results