A little-known independent agency that provides financial analysis of pension systems in Pennsylvania has been caught in the middle of the latest battle between Gov. Tom Wolf and Republicans in the Legislature.
Two Republican state representatives recently sued Wolf to keep the Public Employee Retirement Commission (PERC) alive after the governor vetoed its $962,000 budget in December.
When Wolf vetoed nearly $7 billion out of the $30.3 billion budget at the end of last year, it didn’t appear to be a big deal that PERC didn’t get funded. Other government functions, such as the corrections department and basic education, only received six months’ worth of funding. The plan was that Wolf and the Legislature would negotiate the remaining portions of the budget.
Then Wolf’s Chief of Staff Mary Isenhour sent a note to PERC on Feb. 3 to stop working and fully shut down by Feb. 12. On Feb. 12, Rep. Seth Grove, R-York, and Rep. Stephen Bloom, R-Cumberland, sued Wolf to stop the shutdown.
PERC analyzes proposed bills in the Legislature that would affect the state’s two pension systems and they also analyze municipal pension systems.
The commission had a small staff mainly doing actuarial analysis, which involves looking at risk, rate of return on pension investments and projects costs into the future.
PERC is overseen by a board of nine: five appointed by the Governor and four appointed by legislative leaders. It was created in 1981 by the Public Employees Retirement Commission Act.
PERC also certifies the assets and liabilities in municipal pension plans before the Auditor General sends out $260 million of municipal aid payments to 2,600 municipalities across the state.
Wolf called PERC’s work redundant and said its work could be performed by another state agency. Grove disagreed, saying that nobody else could certify the pension aid payments or analyze pension legislation.
“The reason why retirees want PERC there is because you do not want the General Assembly passing bills that affect pensions blindly,” Grove told PCN on Wednesday. “You want to make sure that when the General Assembly passes a pension bill, it doesn’t create underfunding that may devastate an individual’s retirement income moving forward.”
He said there were ways to maintain PERC’s independence. Rep. Kerry Benninghoff, R-Centre, proposed a recent bill that would house PERC under the Independent Fiscal Office, which provides independent analysis on other types of legislative proposals.
Grove said the attorneys who do a similar type of analysis for the state’s two pension systems work on behalf of the governor. “The only entity that really provides an independent analysis is PERC,” Grove said.
The temporary injunction and the lawsuit will be heard by the Commonwealth Court, which has jurisdiction over cases involving government entities.