Showing posts with label Corbett. Show all posts
Showing posts with label Corbett. Show all posts

Sunday, November 3, 2013

JFK Assassination Debate: Tom Rossley vs. John Corbett (11/23/11)

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JFK Assassination Debate: Tom Rossley vs. John Corbett (11/23/11)

Wednesday, October 2, 2013

Corbett administration not keen on borrowing billions to pay-off pension debt


By Eric Boehm | PA Independent


HARRISBURG — The Corbett administration is not too keen about the prospect of borrowing billions to help pay off Pennsylvania’s unfunded pension liability.


That borrowing would be a key part of a pension overhaul plan introduced this week by state Rep. Glen Grell, R-Cumberland.  His proposal would allow the state to borrow up to $ 9 billion from the bond market to make an immediate dent in the $ 47 billion in unfunded pension liabilities owed to retirees, while also creating a new category of benefits for future hires to save money in the long-run.


But borrowing that much money would add about $ 500 million to Pennsylvania’s annual debt service costs, which already total more than $ 1 billion per year.


PENSION PENNIES: Pennsylvania

PENSION PENNIES: Pennsylvania’s two pension funds have a combined unfunded liability of more than $ 47 billion. That’s expected to grow to as much as $ 65 billion within a few years.



That’s enough to give the administration reservations about the idea.


“Everybody has the recognition that we have to do something sooner rather than later,” said Jay Pagni, Gov. Tom Corbett’s new press secretary. “But we have to address not only the short-term issues with the public pensions but putting together something that will be sustainable and will address the long-term issues of the unfunded liability.”


Earlier in the year, Corbett’s team was pushing for a plan that reduced future, unearned, benefits for existing employees as part of an effort to reduce long-term pension costs.  That has found little favor with lawmakers, who fear reprisals from public sector labor unions and do not want to land the state in a lawsuit that could take years to resolve.


Grell’s plan would allow existing employees to opt-in to the new benefit structure, eliminating the threat of a lawsuit over breach of contract.


Pennsylvania’s two pension funds — the State Employees Retirement System and the Public School Employees Retirement System — have a combined $ 47 billion-plus unfunded liability.  That’s expected to grow to as much as $ 65 billion within a few years, so even borrowing $ 9 billion will solve only a portion of the problem.


But Grell is selling his plan as being similar to how the state handled a $ 3 billion debt in its unemployment trust fund.  To repay a loan from the federal government, Pennsylvania borrowed $ 3 billion at lower interest rates and is slowly repaying, saving money in the process.


By issuing bonds at the current low rates and shoring up the pension systems now, the systems’ unfunded liability would be reduced by $ 15 billion over the next 30 years, with the Commonwealth taking responsibility for the debt service,” Grell said in a press release Monday.


REP. GLEN GRELL: Says Pennsylvania should borrow billions and re-work existing pension plans to deal with the unfunded liability.

REP. GLEN GRELL: Says Pennsylvania should borrow billions and re-work existing pension plans to deal with the unfunded liability.



He also predicted the borrowing would send a strong signal to the bond-rating agencies that Pennsylvania is serious about meeting its long-term obligations.


But at least one ratings agency has warned against using bonds to pay off pension debt.


“If pension bonds merely shifted an issuer’s long term obligations from one similar form to another, in this case from an unfunded pension liability to bonded debt, they would tend to have a neutral credit impact,” experts at Moody’s wrote in a report earlier this year. “However, issuance of pension bonds changes the nature of the liability and typically creates additional risks.”


You have to look no further than Pennsylvania’s largest city to see the consequences of those risks.


In 1999, the city of Philadelphia borrowed $ 1.3 billion to address its unfunded pension liability.  But the city soon began underfunding its pensions again, leaving it with a large unfunded liability and bond debt to boot.


Still, borrowing to meet pension costs is a concept being used elsewhere. Last year, the state of Illinois borrowed $ 11 billion as part of a pension overhaul plan.


But that’s not the only obstacle facing Grell’s pension proposal.  Groups on both the right and the left have criticized other parts of the plan.


Stephen Herzenberg, economist and executive director at the Keystone Research Center, a left-leaning think tank, said he fully supports the plan to borrow $ 9 billion, but said he had “deep reservations about the transition to a cash balance pension plan for new employees.”


He predicted the new plan would cause mid-career and older workers to leave the public system, causing more turn-over of experienced employees.


On the right, Rick Dreyfuss said Grell’s proposal does not go far enough when it comes to changing benefit structures to make public employee retirement plans more predictable and sustainable.


Dreyfuss, a pension analyst for the Manhattan Institute, a conservative think tank, favors a move to 401(k)-style pension plans for each employee.  Grell’s proposal would change the type of plan used by the state, but it would remain a so-called “defined benefit” plan with all the same pitfalls as the existing system.


“It’s a magnet for bad public policy, because they can promise these good long-term benefits and then proceed to underfund the plans,” he said. “There is a host of ways these plans can be misused.”


The type of plan proposed by Grell, known as a “cash balance plan”, differs in some ways from the traditional defined-benefit plans used today, incorporating elements of a 401(k)-style plan.


According to the U.S. Department of Labor, it still counts as a defined-benefit plan and still contains a “promised benefit.”


Labor unions, probably the biggest political element in the pension debate, also are unconvinced about Grell’s ideas.


“There are still many unanswered questions behind these little-vetted cash-balance plans,” said Rick Bloomingdale, president of the Pennsylvania AFL-CIO.  “We will continue to review the details of the Grell plan and urge the Legislature to move in a direction that’s responsible for taxpayers, public employees, and retirees. So far, none of the bills introduced on this issue meet those qualifications.”


If Grell’s proposal is the outline for pension reform in Pennsylvania, it’s still got a ways to go.


Boehm is a reporter for PA Independent and can be reached at Eric@PAIndependent.com.  Follow @PAIndependent on Twitter for more.



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Corbett administration not keen on borrowing billions to pay-off pension debt

Monday, September 23, 2013

Thanks to Governor Corbett, Philly Schools Open Overcrowded and Understaffed


Jaisal Noor, TRNN Producer: Welcome to The Real News Network. I’m Jaisal Noor in Baltimore.


When Philadelphia public school students returned to class earlier this month, they were attending a district wracked by the firing of thousands of employees and the shuttering of 23 schools due to an over $ 300 million budget deficit.


Now joining us to discuss this is Rania Khalek. She’s an independent journalist reporting on the underclass and marginalized. Her work has appeared in AlterNet, Common Dreams, and In These Times magazine. Her recent piece for Truthout is titled “The Systematic Murder of Philadelphia’s Public Schools”.


Thank you so much for joining us, Rania.


Rania Khalek, Independent Journalist: Thanks for having me.


Noor: So, Rania, you’ve been reporting extensively on public education across the country. And we’re going to start our series of interviews with you in Philadelphia, which is perhaps or maybe undoubtedly the school district in the greatest point of crisis around the country. Can you describe the scale of what Philadelphia’s going through right now?


Khalek: Yeah. So, like you mentioned, there were thousands of teachers, almost 4,000–not just teachers–teachers, counselors, school aides, secretaries, assistant principals that were laid off at the end of last school year. And there has also been 23 Philadelphia public schools that were shut down this year. So students went to very different–the year just started, and the year’s already very different than it was before.


Philadelphia public schools are very dramatically underfunded. They’ve been financially starved for years–like you mentioned, over a $ 300 million right now of a deficit. And so the school closings and the laying off of pretty much every possible imaginable person that’s necessary for a school to function is basically being justified by the fact that there isn’t enough money.


And a lot of that’s true.


But, you know, what you have in the end is you have students who literally–I mean, they don’t–they’re going back to schools where there’s larger classrooms. There’s no extracurricular activities. I mean, almost everything the program has been cut–arts, music, sports, and counselors. I mean, one of the biggest problems right now is there’s no counselors. I mean, there’s–one school was able to get one of their counselors back, and it’s, like, one counselor for 1,200 students. And if you think about it, I mean, think about being a senior in high school and how much you really, you know, depend on your counselor to help you applying to colleges, I mean, it’s just–it’s really a mess. It’s a nightmare scenario for Philly public school students right now.


Noor: And many of these students are the highest needs students, the most underprivileged that are getting the brunt of these cutbacks. Can you talk about just how the process of the school–that the schools were closed and the layoffs happened? It can’t exactly be described as democratic.


Khalek: No, not at all. In Philly–and this is something you see around the country in these cities where a lot of schools are being shut down and defunded–is there’s no democratic control over the school system. There’s either mayoral control like you have in Chicago and D.C. or like in Philly–Philly public schools are under state control. Mostly there’s what’s called the School Reform Commission, which was put in place in [incompr.] 2002. It’s basically made up of five individuals, three of which are appointed by the governor, and the other two are appointed by the mayor. And they’re accountable to nobody. I mean, they’re not elected.


So the people of Philadelphia, I mean, there’s no way that the city would be able to implement these kind of draconian policies towards education if the people of Philadelphia had any say, because they are adamantly opposed to the defunding, the dismantling of their public school system. So, yeah, this entire structure of shutting down schools is completely dependent on an undemocratic, very authoritarian process.


Noor: And some have described this as a crisis that was man-made. Talk about the state’s role and the governor, Tom Corbett, a Republican governor, what his role has been in this crisis in Philadelphia.


Khalek: Yeah. So Pennsylvania is a unique state. It’s one of a handful of states that doesn’t have a funding formula for how they fund public education throughout the state. So in Pennsylvania, because of that, actually spends, like, the least amount of money in proportion to other states around the country. It’s, like, one of the last–one of the least–there’s, like, ten states that spend very little money–and Pennsylvania is one of them–on public education. So it basically forces school districts to rely on federal funding and local property taxes.


So what happens is for poor districts like Philadelphia that don’t have as high property taxes or there’s not as much homeownership, so not as many people are paying property taxes, you have fewer funds. And so this obviously dramatically affects public education. And that’s one of the reasons you see such a deficit every year with Philadelphia public schools.


On top of that, you’ve got a Republican governor who every single year since he’s been in office has, you know, cut a huge chunk of the state’s public education budget. And so that severely impacts districts like Philadelphia that are already struggling to get by. So that’s why you see this really, you know, severe scenario right now where there’s thousands of teachers and, you know, counselors and teachers aides that have been fired and schools closed, because, like I said, the district, despite being financially starved, a lot of that is because of the state.


Noor: And, finally, you know, this isn’t going down without a fight. Can you talk about what teachers and students and parents are doing to challenge these policies?


Khalek: So Philadelphia is really unique also because it’s got a really vibrant community of residents who are adamantly opposed to education, to the corporate education agenda, I guess you could call it. There’s, you know, the student–the Philadelphia Student Union has been on top of this. It’s–they’ve done student walkouts, they’ve coordinated student walkouts. There’s teachers, the teachers union. There’s also teachers organizations that have been involved. And there was–you know, when the counselors were fired at the end of last year, there was–they did this really, really great campaign where they basically, like, promoted various counselors and talked about, like, the personal–the way that they personally help students that they’ve worked with. There was also a hunger strike that involved, you know, teachers and parents late last year. And, you know, this activism is continuing. And there’s protests all the time. There’s–you know, it happens all the time. There’s protests outside of the School Reform Commission. Whenever they have meetings, there’s constantly this activism going on, this organizing. So it’s really–that part’s really, really exciting. It’s just difficult for them to have an impact when the people making these decisions are not accountable to the residents.


Noor: Rania Khalek, thank you so much for joining us.


Khalek: Thanks for having me.


Noor: And this is just the first part of our series of interviews with Rania about her work. Go to TheRealNews.com for that full collection. Thank you so much for joining us.


Also See: The “Systematic Murder” of Philadelphia Public Schools




Truthout Stories



Thanks to Governor Corbett, Philly Schools Open Overcrowded and Understaffed