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Pennsylvania's Government Pension Crisis (Part One)

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I don't know about you, but I've got the Pennsylvania Pension Blues.

If you are a regular reader, or if you ever let your eye wander up into the corner of the page to my brief bio statement, you know that I live in Pennsylvania. Pennsylvania is a funny place: it used to be one of the now-infamous "blue firewall" states that was supposed to have protected us from Old Man Trump, but it failed to deliver. Pennsylvania is, as one saying goes, Philadelphia on one end and Pittsburgh on the other and Alabama in the middle. It is, as another saying goes, a big red T (with southcentral PA, where I live, forming the base and the arms stretching above the two metropolitan areas). Some people call it "Pennsyltucky." It is a mixture of deep-red Republican voters in the middle flanked by reliably Democratic voters on its edges, and the culture war runs as hot here as anywhere. Sound familiar?

What Pennsylvania is not, despite its reputation as a firewall state for Democratic candidates, is a bastion of progressivism. Both houses of our state legislature are controlled by Republicans—they outnumber Democrats 123-80 in the state House and 34-16 in the state Senate after making more gains in November—and while our current governor is a Democrat, elected after the outgoing Republican failed to secure re-election in 2015 amidst some of the lowest approval ratings in the country, he has little ability to effect change in the face of unified opposition. Again: sound familiar?

I offer this prologue as context for a little Twitter conversation I have been involved in with Chad Aldeman, a "principal" at Bellwether Education Partners with an acute interest in teacher retirement systems. I want to post a disclaimer before we go any further: I don't spend my days thinking exclusively about teacher retirement. It is one of many interrelated issues that interest me as I continue to try to figure out how to make teaching a more attractive and secure profession. Since I don't spend a lot of time on it there may be holes in my thinking, and I do not pretend to know all about this issue. I do know this, though: if I did spend my days thinking exclusively about teacher retirement, I think I'd come up with a better plan for solving this crisis than the one Aldeman seems to be offering. I'll explain in a minute.

But, first, let's look at the contours of the issue, which will be familiar to almost anyone. Pennsylvania, like many states, has a guaranteed benefit pension system for public employees, including teachers, and it's in trouble. The long and short of the issue is this: back in the early 2000s, the state increased benefits for some state employees (including teachers and, it should be noted, legislators), then skipped out on its obligation to pay into the system in support of future retirees. Now, oddly enough, the system faces a huge shortfall. As one reporter put it, "Pennsylvania's government pension crisis should come as a surprise in the same way as does one's car seizing up after not having changed the oil for 15 years"—which is to say that it is "shocking, but not unexpected if you have an understanding of how it works."

This has left the state with a couple of unsavory options to consider. One is, of course, to reduce benefits, and that's dangerous. There are about 125,000 teachers in Pennsylvania, and no doubt many of them vote. That's a fraction of the 6 million who voted in the election last month, but it looks like more when you consider that Trump won here by barely more than 44,000 votes. Or maybe legislators just realize that reducing benefits for others might mean having to reduce them for themselves. Who's to say? 

A second option would be to ask teachers (and other state employees!) to shoulder more of the burden when it comes to funding their benefits. This is the tactic Rahm Emanuel tried in Chicago. The trouble here is that it's hard to make a promise then break the promise simply because you decided you no longer want to keep it. (I should say: that kind of thing used to be a problem before the ascendance of Trump; now who knows?) Maybe teachers should be asked to contribute more to their pensions but let's remember this: most are not being paid all that well to begin with. Part of the deal for teachers has always been an implicit understanding that teachers will trade better salaries for more security and better benefits. It's never surprising when elected officials try to have it both ways, but it's still disappointing.

That has left our legislature with one viable option: make up the difference to ensure that the retirement system stays solvent. In Pennsylvania, this could have gone one of two ways. One solution would be for the state to admit its malfeasance and transparently ask taxpayers to deliver on a promise made. But in Pennsylvania we all pay a flat 3.07% state income tax, which constrains the state's ability to do things like this (and, not for nothing, does not seem to have delivered non-stop job growth and investment, as flat taxes are always reputed to do). So our legislators did the next best thing: they passed the buck. It's an old American tradition, and it seems to be working. Local schools are asked to pay more and more to support the system, legislators keep getting re-elected, and someone else gets the blame for the problem.

Teachers, of course, and especially their unions, are the ones who typically get the blame. They're greedy, we're told. They're starving our local schools of revenue and causing huge property tax increases thanks to their unbridled avarice and callous indifference to the needs of students. They only care about themselves. That these statements could all be said of the legislators actually responsible for funding schools is somehow lost in the noise. When it comes to blaming nameless, faceless people for society's shortcomings teachers are always a convenient target. This is like page two in the playbook.

So what's the solution? I'm going to try to start unpacking that over the next couple of posts. First I want to try to figure out what Aldeman, and others who share his viewpoint, seem to be arguing for. For now let's settle on this: if you pay taxes in Pennsylvania, you should have the blues. I do, and these blues are hard to shake. Knowing that my property taxes are bound to only continue escalating as the pension problem metastasizes gives me a sinking feeling in my stomach. Frankly, sometimes it makes me wonder why I shouldn't just pick up and move to Maryland.

I'm not going to do that, though. It never pays to run away from a problem. What I am going to try to do is shine some light on the bankrupt ideology of unfettered privatization and deregulation that fuels this debate and do my best to ensure that people understand who's responsible for getting us into this mess. Spoiler alert: it ain't teachers. It's legislators, many of whom we keep sending back to Harrisburg again and again despite their abject failure to address the needs of Pennsylvania's schools. If it's accountability we want to talk about, maybe we should start there.

In short, knowing the plays that are going to be called might help us come up with a better way to defend against them. If page two of the playbook instructs privatizers to blame teachers and other public employees for the failure of public institutions, page one tells them that making sure public institutions run inefficiently makes their eventual failure a self-fulfilling prophecy. But it doesn't have to be that way. Let's see if we can find a decent solution to the problem—one that actually gives teachers real retirement security and spreads the responsibility for providing it more evenly. It's not as far-fetched as it sounds.

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