IT’S TIME TO SEPARATE MYTH FROM REALITY

Myth

“Pension costs are not an issue that affects me.”

Fact

If you live in Pennsylvania, the uncontrolled legacy pension costs for public safety employees are a growing threat to every community and by extension, every citizen and every business. Managing the costs of these pensions is unsustainable for even the most fiscally sound municipalities. Quality of life services that we take for granted are the first in line for cuts when a municipality is faced with runaway pension costs and tough budget calls are necessary.

Myth

“Underfunded pensions are a city problem; I don’t live in a city.”

Fact

Underfunded pensions are a statewide problem. Communities with full-time police and fire personnel are most impacted, but any size community can have an underfunded pension plan. In fact, 66 of Pennsylvania’s 67 counties have at least one municipality with a pension plan under a high level of financial stress. Taxpayers and residents eventually carry the burden in higher taxes and less services. Finding a solution to the current system is gaining bipartisan support in urban, suburban and rural communities alike.

Myth

“Pension legacy costs can’t be that big of a burden. How bad can it be?”

Fact

The total unfunded liability carried by Pennsylvania taxpayers for municipal pensions is nearly $8 billion. This does not include the annual pension payments required which is nearly $866 million. Meeting this staggering amount annually threatens basic services such as public works, public safety, snow removal, parks and recreation, and road maintenance. The only options for a municipality facing millions in pension debt and annual payments is to raise taxes and cut services. High taxes and less services do not make a community a desirable place to live.

Myth

“If I support pension reform, I am disrespecting the service of our brave police officers and firefighters.”

Fact

Quite the opposite, under the Fix The Numbers proposals, current and retired public safety employees will remain whole, retaining all of their existing rights and benefits. Current benefits will be frozen, however, in order stop the growth of these pensions and the associated costs. Freezing benefits gives municipalities the ability to plan and eventually payoff the unfunded liability that is threatening current jobs and pensions. Future public safety employees will still receive a good pension, one closer to what most American workers currently receive. Pension costs will be much more predictable; and the risk of underfunding is mitigated. Finally, future employees will have more portable pensions. This is not possible under the current pension system because of the vast differences among plans.

Myth

“Pension reform is just another divisive political issue. Employers want it; employees don’t.”

Fact

This issue transcends politics. The futility of funding public pensions the same old way, based on obsolete models and decades-old formulas, is one issue many agree on. The private sector has moved out of the dark ages; it’s time to bring public sector pensions into the 21st century and in-line with the economic realities of most working people. Common sense guides this issue, not politics.

The Fix The Numbers proposals are endorsed by the Pennsylvania Municipal League and the Coalition for Sustainable Communities, a non-partisan alliance of chambers of commerce, local government associations and other business, community and municipal leaders.

Myth

“Fixing this systemic problem is too big of a hurdle – it can’t be done.”

Fact

Continuing to ignore the problem got us into this situation. There is no quick fix to the current pension crisis without a huge influx of revenue, but even then the underlying structural problem is not solved. The solutions presented in the Fix The Numbers campaign are genuine. Both solutions draw a line in the sand on the existing public safety plans; bring benefits for new hires more in line with typical retirement plans in the private sector; and use a more realistic formula for determining those benefits.