To the editor:
Do you remember who loaned Philadelphia millions of dollars not too many years ago when it was in a similar financial position like Harrisburg is today? You're correct if you answered the Pennsylvania School Employees Retirement System.
Before 2002, PSERS was in sound financial condition. What happened? Gov. Ridge and the legislature made an agreement whereby PSERS members could retire in less time with higher pay, and the state and the local school boards could delay paying their share into the system for 10 years.
It was like cutting taxes to reduce budget deficits while continuing to spend more. Of course, the legislatures increased their own benefits even more. They were counting on the stock market to pay for the increased amounts.
Unfortunately, it tanked in 2008, and the state and the school boards were excused from paying their share into the PSERS until 2012, and the employees' share wasn't enough to keep the system financially secure.
Now, Gov. Corbett is asking the legislature to switch PSERS into a system similar to a 401k plan. Do your really think that Philadelphia would get that same loan that saved the city and made big bucks for the PSERS with that kind of plan? No, but Wall Street would love it because most employees are poor investors.
Before 2002, the PSERS was in great shape until the governor and the legislature tinkered with a great retirement plan that didn't need fixing. Will they do it again? How soon we forget.
David L. Faust