No more “spiking” (working lots of overtime near the end of one’s employment career to enhance pension payouts), a longer period of employment to become vested in the pension system, higher employee payments into pension plans, and all of this falls on new hires.
The place where these changes are happening are at the Southeastern PA Transit Authority, or SEPTA. Officials there are hoping that changes that will affect non-union employees in 2016 will save $183 million and raise the current 60% funded ratio of the pension fund.
If those changes sound familiar, they should since benefit changes to new hires have occurred in Allegheny County government, City of Pittsburgh government, and at the Port Authority, which provides mass transit service in Allegheny County.
Recall too that many have held up the idea of a SEPTA-like system as a model for southwestern Pennsylvania (read here, here, here, and here) and the idea was studied by PENNDOT as directed by state legislation. Much of the resistance to a consolidation in the counties in SW PA outside of Allegheny County was due to the legacy costs of the Port Authority, a conclusion upheld by PENNDOT.
Based on our 2011 report and data analysis, the population density in SEPTA’s service area meant that it could operate bus service on a trip and hourly basis much lower than a consolidated southwestern agency could. However, the fact that the larger SEPTA system has had to tackle legacy cost issues does not help bolster any case that a larger system here would bring about efficiencies and avoid legacy cost issues.
