By Chris Comisac, Capitolwire
Did failing to rubber stamp the pension reform savings figures claimed by Gov. Tom Wolf’s administration lead to the Public Employee Retirement Commission having its operating budget eliminated?
“We got axed in the budget,” said PERC Executive Director Jim McAneny. “We’ve been axed in two prior budgets, so we’re three-for-three now.”
You can’t miss how PERC got “axed.” It’s the first line item in the budget to get adjusted by Gov. Wolf’s blue pen, getting zeroed out. And while there were plenty of lines, and plenty of programs and agencies, affected by that blue pen, it appears as though PERC is the only agency to be totally defunded by Wolf.
A pair of sources suggested a blowup between the Wolf administration and PERC Executive Director Jim McAneny, regarding the framework pension reform legislation, caused Wolf’s budget backlash.
McAneny submitted the cut could have been, at least partly, a “so there” response by the administration, but wouldn’t state it was definitely retaliation. He acknowledged “we weren’t able to react as quickly as they would have liked us to.”
“What is the reason for that [cut]? I’m not the person to be able to answer the question because they didn’t consult with me on it,” he said.
Wolf spokesman Jeff Sheridan offered the administration’s reasoning: “Both pension systems already provide thorough, independent actuarial analysis for all pension legislation considered before the General Assembly. The actuarial analysis provided by PERC is redundant and an unnecessary expense of the commonwealth.”
According to the aforementioned sources, the Wolf administration wanted PERC to hold a meeting early in December, well before the commission could have an actuarial analysis done on the pension reform proposal.
In the absence of an analysis done by Milliman, PERC’s contracted actuarial firm, the commission was supposed to accept the figures offered by the pension systems and the Wolf administration.
McAneny refused to do that – allowing Milliman to subsequently find a few errors within the legislation, including one that erased an estimated $630 million in long-term savings – instead pushing for his agency to do one of its many important jobs. However, his decision appears to have put in jeopardy PERC’s ability to do much of anything going forward.
“It’s gonna run tight – we can still make payroll … but we can’t spend any other money,” said McAneny. He said if the current budgetary situation lingers into the spring, with PERC’s funding not reinstated, it could ultimately have a fiscal impact on some of the state’s local municipalities.
“The potential does exist for some municipalities’ state aid to be in trouble, but we’re still a little bit away from that,” said McAneny.
PERC is the “regulatory and enforcement agency for the funding of local government pension plans,” he explained. “Every two years, every one of those local [pension] plans files an actuarial valuation report with us, and, of course, this is one of those years, 2016.”
He continued: “The reports have to be in to us by the end of March. We then do a review of each of those, get additional information where necessary, make corrections where necessary and nag people when they don’t have them in, where necessary. Ultimately, we calculate the costs of each plan, which we then certify to the Auditor General, and that’s utilized in determining what their [a municipality’s] state aid should be.”
“… the governor’s office forgets that we have the local government function to perform,” said McAneny.
“We’re also the enforcement agency – we’re the ones that drag them [municipalities] into court and compel them to put the money in [to their pension plan],” he added. “We can’t do that, we don’t have the money … we don’t have the ability to enforce the funding standard right now.”
“That capacity does not exist until we have a budget,” he said, noting that filing anything is made difficult with no budget.