Sen. Browne comes to the rescue in the state's fiscal crisis

It is state Sen. Pat Browne galloping to the rescue of Pennsylvania taxpayers, who face the burden of many billions of dollars for the enhancements of Medicaid and public employee pensions.

Browne was prominently mentioned Friday in a Morning Call story about a crisis of "exploding pension costs" and Medicaid spending. A task force report, it was reported, outlined financial "storm warnings" for states across the nation. It gave six other states as examples, but the story said Pennsylvania also faces "runaway Medicaid spending [and] growing public pension obligations."

One problem, it was reported, is that Pennsylvania has been paying only a third of what it should pay into pension funds each year. (Politicians like to shift the tax load to future election years.)

A dramatic increase in Medicaid costs may not necessarily be as big a problem, because the June 28 U.S. Supreme Courtruling to uphold President Obama's health reform law also allowed states to opt out of a big expansion of the Medicaid program.

Still, the story noted that about $19 billion in federal and state funding is spent on Medicaid each year in Pennsylvania. The state share of that is nearly $9 billion, and Browne was quoted as saying "there's no way they [states] can sustain the funding from the expansion. … It would be unwise for us to take on additional commitments."

He may be right about that, and the pension problem is smaller, at the moment, but it's growing by leaps and bounds.

Five years ago, Browne had a column in The Morning Call saying a "severe financial disaster is looming" for Pennsylvania, where a "defined pension benefit program is facing significant funding shortfalls."

His proposed solution would be to change from a defined benefit program (the employer provides set matching investments in a pension fund and then provides a set monthly benefit at retirement) to a "Unified Contribution Pension Plan Act," in which employees do not help sustain the system for previous retirees, cannot adjust their own pension accounts, and do not necessarily get matching contributions.

A Morning Call editorial in 2009 praised that plan and gave an example of why the current approach can be a problem. One state bureaucrat, the editorial said, received a pension of $30,000 a month for life.

We need to look a little deeper into the pension problem, however, to see how we got in this pickle and where it might lead.

According to the Commonwealth Foundation, a conservative think tank mentioned in Friday's story, the costs of the pension programs for state employees and school employees are soaring. It said in March that the "total taxpayer contributions for these two plans will increase from $1.7 billion in 2011-12 to more than $6.1 billion in 2016-17 — a 257 percent increase."

The foundation blamed that increase on three things — state legislation increasing pension benefits in 2001, pension fund investment losses since then, and legislation in recent years "to delay pension contributions, requiring higher future payments."

A chart projects continued increases even after 2016-17, until the burden on Pennsylvania taxpayers is over $8 billion a year — just to provide juicy retirements for teachers and state workers.

These projections are not new. In 2006, the foundation warned of "a looming fiscal crisis" because of what had happened with those two pension funds since 2001.

In 2001, then-Gov. Tom Ridge wanted educational reforms, including teacher testing, that the all-powerful teacher unions opposed. So a deal was made. Legislators would go along with his reforms only if Ridge agreed to sign a measure increasing their personal pensions by 50 percent.

The reforms were approved on one day and the pension measure was approved the very next day — all without the usual hearings and with no public discussion. Ridge promptly signed both; a deal is a deal.

The legislation giving legislators their 50 percent boost in pension benefits also gave a 25 percent boost to 343,000 other state and public school employees.

No need to worry. There were big surpluses in the retirement system, sure to continue in a booming economy now thatGeorge W. Bushhad just taken over as president. There was so much revenue rolling in, it would not hurt taxpayers a bit.

It didn't work out that way.

That brings us back to Browne. Actually, I didn't think about him until I got a call from Frank Distasio of Macungie, a retired English teacher (Parkland) I got to know when he played clarinet for the Allentown Band. "Browne voted for Act 9," he said.

What, I asked, is Act 9? "That was when the legislators gave themselves a 50 percent boost," Distasio replied.

I looked at the 2001 roll call in the House, when Browne was there. Sure enough, he voted for the very measure that now has put Pennsylvania in such a predicament.

I called Browne to ask about all this, but he did not get back to me. However, one of his adversaries, state Sen. Jim Ferlo, a Pittsburgh Democrat, gave Browne credit for helping to enact reforms in 2010 that reduced some of the problems caused by the 2001 fiasco, even though he clashes with Browne on his new pension plan.

Still, it was Browne who, in 2001, helped create the mess he now says only he can fix.

paul.carpenter@mcall.com 610-820-6176

Paul Carpenter's commentary appears Sundays, Wednesdays and Fridays.

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