Timing, Cost of Bumping Up State Pensions Questioned

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HARRISBURG -- To Lucille Montani, the timing of a pension increase advancing in the Legislature for retired state workers and teachers is just awful.

"It is absolutely obscene they'd think about raising their pensions when the economy is in such horrible shape," said Montani, 77, who lives on her late husband's railroad pension and income from her small tax preparation business in Collier.

The House State Government Committee on Tuesday unanimously approved legislation that would hike pensions for more than 250,000 retired teachers and state retirees -- including former state lawmakers. The bill, which would cost $10.4 billion over 20 years, could be approved by the Legislature because of election-year pressures and because retirees haven't had a boost in six years, some lawmakers and political analysts say.

"There's been immense pressure from retiree associations, and retirees individually, contacting legislators and saying, 'We're way overdue for a (cost-of-living adjustment,)' " said Republican Rep. Matthew Baker, a key supporter from Tioga County. The bill by Rep. Steve Nickol has what Baker believes is an unprecedented 155 co- sponsors.

That fails to impress Rick Dreyfuss, who retired several years ago as director of compensation and benefits at Hershey Foods.

"All it does is saddle the next generation of taxpayers with paying for it. ... And we haven't even paid for the last one yet," Dreyfuss said, referring to the 2002 cost-of-living adjustment lawmakers approved shortly after bumping their own pensions by 50 percent and adding a 25 percent increase for most other state and school employees.

If passed, the raise would add about $500 million a year to the $1.1 billion taxpayers send to two pension funds -- one for teachers, one for state employees -- which are financed with tax dollars and employee payroll deductions.

Dreyfuss said about one-third of the cost of the proposed raise will be shifted to school districts, which rely on property taxes.

"I'm just shocked at the number of people who say they're for lowering property taxes, yet are solidly behind this initiative," Dreyfuss said.

Jay Himes, executive director of the Pennsylvania Association of School Budget Officers, said his members are worried about the impact a raise for retirees would have on their budgets.

"We already are facing a spike in 2012," Himes said, explaining actuarial projections show employer contribution rates for the school pension system will increase to 13 percent that year.

But retirees are optimistic their concerns will prevail this year as lawmakers prepare to face voters in the fall.

Marcella Fillaggi, who said she is in her 60s, retired as a teacher from the Fox Chapel School District in 2000 and chairs the school retirees' legislative committee. …