Guest Editorial: PA Budget Update: It’s Still All about Pension Reform

Pennsylvania State Capital Building in Harrisburg.

By Guy Ciarrocchi

Pennsylvania’s Pension System is vastly underfunded and has amongst the largest debts and lowest-funded-obligation percentages in the nation.

So what?  We care for two reasons: First, every dollar spent chasing this growing debt is money not spent on schools, roads—or (one can wish) tax cuts!  And, Second, the problem is easily fixable.  We could stop digging a pension debt tomorrow if Harrisburg chose to act.

Stunningly, and almost without any peer in the private sector anywhere in America, Pennsylvania still maintains a “Defined Benefit” pension program.  For example, begin work today at PennDOT and the state guarantees your monthly pension check amount upon retirement—to the penny! (We have an identical parallel problem is our School Districts, and municipalities.)

Decades ago, the private sector knowing this type of system will swallow-up a companies’ assets switched to “defined contribution” funds (or even stopped setting up retirement accounts—leaving it to employees to do this on their own).

Yet, our representatives in Harrisburg have done nothing to face fiscal reality.

This growing deficit and growing debt requires the state to spend about $500 Million in additional taxpayer dollars each year’s state budget—just to tread water.  So absent serious, immediate reforms—in just Governor Wolf’s term as governor, as a frame of reference—taxpayers will spend almost $2 Billion just to try to keep pace with the interest.

We will not have shrunk the pension-debt at all.  And, by not addressing the problem, new state employees are being hired every day; thus, creating a growing debt…and, a bigger, costlier problem.

Let’s look at this way: you have a mortgage on your home.  You choose to only pay the interest every year; thus having the principle still there.  And, for purposes of this analogy, every day you have your mortgage, you open a new Home Equity Loan—every day.

And every year you have to find a way to beg, borrow and juggle just to pay the loans’ interest—never paying the loan principle.  And, again, every day—every single day—you open another Home Equity Loan.

Eventually, even paying the interest will consume so much of your income that you will struggle to find the money for food or college tuition or medical care—let alone a car or a vacation.  And, eventually, the bank will demand that you pay the principle.

That’s where we are as a state.  That’s why we ought to care that Harrisburg isn’t fixing this problem.  Hundreds of millions each year of our dollars; billions each decade: and, all we have to show for it are a growing debt, a broken pension system—and money not spent on schools, roads, or…tax cuts to make PA economically appealing to new businesses.

State Rep. Warren Kampf has been leading the fight to change the state pension system from Defined Benefit to Defined Contribution.  He deserves our thanks—and, our help.

Otherwise, it’s time for PA to take out yet another “Home Equity loan;” and, they will send the bill to us.


Guy Ciarrocchi, President & CEO of Chester County Chamber of Business & Industry, can be contacted via telephone at 610-725-9100 or email at





Top photo credit: pontla Pennsylvania State Capital via photopin (license)

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