February 11, 2014:
Dr. John D. McGinnis
Pennsylvania Representative, 79th District
Suppose a corporation’s CEO, with full approval of its board of directors, has been siphoning off required pension contributions to cover other company expenses. And suppose the CEO admitted as much in public and stated a policy of continuing to use employee-earned benefits in this manner. Does anyone doubt that is both immoral and illegal? Does anyone doubt that the CEO and the board of directors would likely go to jail? And rightly so: It’s called misappropriation of funds.
Yet, Pennsylvania’s government appears to be doing the same thing. In his budget address, Governor Corbett proposed to continue a policy of short-changing pension contributions in the name of "budgetary relief." We now label the abdication of our constitutional duty and the misappropriation of employee-earned benefits as "budgetary relief."
How is it that we in the state legislature and the governor are not being indicted? Well, we write the laws that make that shameful and immoral activity perfectly legal. You see, there are two sets of laws in our Commonwealth-one very pliable set for public "servants" that tolerates all sorts of bad behavior, including the expropriation of employee compensation; and another set that applies to everyone else. Why is the standard of honest behavior and fair-dealing lower for public officials?
One lie begets another. How do we claim we’ve balanced our state budget in any year while we’ve simultaneously underfunded the public employee pensions? If you ran your family budget by paying only a part of your mortgage and car payments and then used this "savings" to exhaust your salary on other things, would you call that a balanced budget?
The primary reason for the unfunded liability at SERS and PSERS (reported at $50 billion, but it’s actually near $120 billion) is the failure of government to make its required contributions. The state government has been giving itself a funding holiday since at least 2003. Against their duty as fiduciaries, state legislators and governors, past and present, have willfully abused the public trust.
To be fair to the governor, he has been following the law, Act 120, which was enacted before he arrived. And there is little support from legislators now to do the right thing. But for him to call for continued underfunding of the earned benefits of public employees, which at a minimum will rob future taxpayers in a grand scheme of intergenerational theft, well, that amounts to legalized larceny. And any legislator that abets that practice deserves opprobrium and contempt, not to mention a jail cell.
However we manage our state budget, we must adhere to the Pennsylvania Constitution and its judicial interpretations, which say that the pensions earned by public employees get the highest priority of state government revenues. The only moral and constitutional approach is to fully fund them in accord with economic and accounting norms. To do otherwise is nothing less than dereliction.
Citizens Alliance of Pennsylvania (CAP) is a non-profit organization founded to raise the standard of living of all Pennsylvanians by restoring limited government, economic freedom, and personal responsibility. By empowering the Commonwealth’s employers and taxpayers to break state government’s "Iron Triangle" of career politicians, bureaucrats, and Big Government lobbyists, this restoration will occur and Pennsylvania will prosper.