Go ahead and blame the budget shortfall on teachers. On May 17, 2001 the fate of the state pension funds for teachers and and state workers was sealed when former Republican Gov. Tom Ridge signed Act 9. This piece of poorly conceived legislation was forced through in the dead of night. It gave state lawmakers a 50 percent bump in pensions for themselves while loosening vesting requirements to five years for all General Assembly members.
Another thing this bill did was loosen the provisions on permitted capital investments of pension investment funds. Vulture investment fund managers, some of whom are Republican donors, were the ones who actually “lost” the pension funds through their investment decisions. Before these changes, the pension funds were solvent for 75 years. These changes also allowed charter school employees, including some charter school owners (aka Republican donors), to participate in the state pension plan.
To make this more palatable to Democrats, they amended the state code for both public school and state government employees, changing the amortization period from 20 years to 10 years and lowering the the employer contribution from the state and local taxpayers. Back then, the Republican House and Senate spoke of how hard-working teachers and state workers deserved this pension hike.
This was done under the guise that their fund management pals would produce a constant 11 percent gain year after year. They didn’t, and because the state and local school districts no longer had to pay into the system in a responsible way, when the recession and the Bush funding cuts to public education hit, the pension funds became and remain vastly underfunded. Additionally, job-creating Bush tax cuts went to the wealthy and came at a great price to education.
So go ahead and spew your disdain at the teachers and the state workers. Just remember that it was a Republican governor and a Republican-controlled state Legislature who brought on this house of cards.
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