Whose ox is gored will be the key issue in Pennsylvania finding a way out of the pension crisis that threatens to consume the state budget in the years and decades ahead.
To recap the situation, Pennsylvania's two state pension plans - State Employees' Retirement System and Public School Employees' retirement system - currently are obligated to pay out $41 billion more than the plans have in assets. To close that liability gap will require the state and public school districts to contribute significantly more for the coming decades.
Both pension plans are defined benefit, meaning retirees are guaranteed a certain pension amount based on their years of service and average final salary. If the plans are underfunded, taxpayers are obligated to make up the difference.
The state constitution prohibits reducing pension benefits that have been earned, so Pennsylvania can't cut its way out of the hole.
Complicating the issue are the vested interests of those who have to make and review the decisions.
Because the pension plans are enacted by statute, the General Assembly, lawmakers - most of whom are enrolled in SERS - would have to approve any changes.
The state can establish a new pension system for people not yet hired, and the state took a step in that direction with Act 120 of 2010, which reduced the pension benefits of new employees.
And theoretically at least, the state might be able to tell current employees that they will keep all of the pension benefits under the current plan earned to a certain date, but any pension benefits after that time will be under a new system.
Would legislators be willing to cut their own generous pension benefits? Or would they try to exclude themselves from any pain?
Legislators' pension benefits are 20 percent higher than a state employee or teacher earning the same amount and with the same years of service. That cannot be justified.
One could argue that legislators shouldn't get a pension at all, but trying to get that passed seems like a pipe dream.
At a minimum, legislators should reduce their future pension benefits so they get the same percentage as other employees.
Also bedeviling any changes to the pension system are the inevitable lawsuits that would follow. That's problematic because it would be up to the courts to decide the cases, and judges also are part of the state pension system.
Unless the legislation specifically creates an exception for the judiciary, judges would be making decisions that likely will affect their own retirement benefits.
After legislators repealed the 2005 pay raises following public outcry, the state Supreme Court ruled that while those raises could be taken away from legislators and top executive branch officials, they could not be taken away from the judiciary. Judges were the only group that got to keep those raises.
It's reasonable to suspect that getting the judges to rule favorably on a plan that would cut their future pension benefits would be a struggle.
Still, that's one of the things needed to solve the current crisis.
WEDNESDAY: What should be done.
