HARRISBURG - State and school employees would be forced to forgo nearly $12 billion worth in pension benefits over the next 30 years if Gov. Corbett's pension changes are approved, according to an administration analysis released Tuesday.
The itemized summary marked the first time the administration had publicly disclosed estimates of the savings and costs associated with the plan Corbett unveiled in his Feb. 5 budget address.
The Republican governor's proposal to reduce benefits for current employees is the centerpiece of his initiative. But it faces an uphill fight in the legislature and possibly in the courts.
"We will maintain that doing so would be unconstitutional," Wythe Keever of the Pennsylvania State Education Association, the state's largest teachers union, said Tuesday.
Corbett's plan to put newly hired employees in 401(k)-style plans would save taxpayers more than $2.5 billion through 2043, compared with the cost of enrolling them in the present defined-benefit plan, according to the summary.
But those savings would be more than offset by proposed limits on the growth of taxpayers' share of pension costs in the next few years, which would push more than $3 billion in new costs into later years.
Earlier Tuesday, state Treasurer Rob McCord and a labor-affiliated research group attacked Corbett's proposal. McCord, a Democrat who is considering a run for governor in 2014, and economist Stephen Herzenberg of the Keystone Research Center said in a teleconference with reporters that the plan would not save taxpayers money but instead would cost more.
An administration spokesman countered that the critics ignored potentially huge savings from the proposal to reduce future benefits for current employees. The biggest portion of that savings would come from a reduction in the "multiplier," a percentage applied to an employee's years of service and final average salary to calculate the pension.
"Their argument is based on only half the facts," said state budget office spokesman Jay Pagni.
McCord and Herzenberg said the replacement of the pension plan would reduce the return on investments needed to provide benefits for the aging employees still enrolled in the current plan as fund managers sought less risky assets.
At the same time, the state's 4 percent matching contribution for new hires automatically enrolled in the 401(k)-style plan would come from existing pension fund assets, further increasing the cost to taxpayers, they contended.
"The governor's proposal will dig a deeper pension hole, with taxpayers on the hook," Herzenberg said.
On Wednesday, officials of the two major pension funds are to appear before legislative committees scrutinizing the governor's state budget plan for the fiscal year starting July 1.