Dive Brief:

• Although a new bill cutting pensions for future state and school employees has passed Pennsylvania’s Senate, it faces stiff opposition from critics and still needs to make it through the state’s House.
• The Pittsburgh Post-Gazette reports that the overhaul would take “the existing pension benefit and reduce it by half, making up the difference with a 401(k)-style plan for new state and school district employees,” but wouldn’t go into effect until July 1, 2017, for new school employees and Jan. 1, 2018, for new state workers.
• Unions including the Pennsylvania AFL-CIO have already threatened lawsuits and spoken out in vehement opposition to the plan, which reportedly may reduce workers' total retirement income by 10-15% overall.

Dive Insight:

Pennsylvania’s budget meltdown has continued since June 2015, and the impasse that has already cost school districts over $11.2 million dollars in borrowing fees and interest. Some districts have struggled to get loans approved or faced credit downgrades due to borrowing and budget showdown. Worse, the education system has been plagued by management troubles and “misdirected” leadership, an October state audit noted. Despite the new pension-reducing proposal on the table, the state will likely continue seeking areas to slash.