In 2017 we wrote several pieces on the state budget impasse as well as the enacted plan to change the pension benefits for new state and public school employees under Act 5.  The budget for the current fiscal year came together after a spending plan was passed at the end of June, became law without the Governor’s signature in July, and then was completed with a revenue package passed at the end of October.

Thus the state–with the delayed enactment of a revenue plan–is already halfway through the fiscal year that ends June 30, 2018.  Last month the Budget Office released its mid-year budget briefing.  That briefing shows the details of what was enacted for 2017-18 and how much general fund spending has grown since the 2014-15 fiscal year ($2.8 billion in actual general fund spending that year).  The briefing notes that $1.4 billion of that increase resulted from increased contributions to SERS and PSERS, the state and public school retirement systems, respectively.

Slide 10 of the briefing states that Act 5 reforms will “…reduce employer risk” but as our Brief noted ” over the next decade or more, the Commonwealth and school districts will face a continuation of budget problems as they deal with the massive unfunded liability issue. ”  As far out as the projections from the briefing show (2021-22, which would be three years after the Act 5 changes take effect) the general fund share of contributions to both SERS and PSERS are projected to grow $40 million and $408 million, respectively.  The actuarial tables for the plans show slow improvement in the early part of the next decade as new hires join the plans, with not much difference between what would have been the funding status absent Act 5.