Cost of average employee will continue to rise in Pa.
HARRISBURG - State Budget Secretary Charles Zogby's fiscal briefing last week included an interesting chart showing the anticipated cost growth over the next year for the average state employee.
The average cost will increase nearly 9 percent for the 74,000 state employees (including management and unionized workers), according to the budget office.
The total average cost which includes salary, health and pension benefits and other benefit-related costs, will increase to $89,344 in fiscal 2014-15 from $82,041 in fiscal 2013-14.
The average salary goes to nearly $52,000 from $49,554, reflecting pay raises to union employees agreed under existing labor contracts.
The average health care cost for an employee will increase to $11,876 from $11,093.
And the average pension cost for an employee will increase to $10,383 from $7,493, a hefty 38.6 percent increase.
The higher employee costs will create problems for state agency heads trying to meet Gov. Tom Corbett's directive to keep funding levels in their budgets for next year, said Zogby. Level funding equates to an eight percent cut for an agency because of the need to absorb the higher employee costs.
"Level funding is not easy," he said.
The greater pension costs will be borne by a $110 million increase in state payments for state employee pensions, one of the factors making it more difficult to balance the next state budget, said Zogby.
State government must increase its employer contribution rate to state employee pensions by 4.5 percent under a 2010 state law that put off the full reckoning of a generational spike in public pension costs until mid-century. State employees contribute to their pensions too.
Zogby expressed hope that lawmakers will pass new legislation to reduce pension costs for state government and school district employees and allow lower contribution rates.
House Democratic Appropriations Chairman Joseph Markosek, D-25, Monroeville, said the state's fiscal problems are due to unaffordable tax breaks for businesses and not pension payments.
The 2010 law reduces pension benefits for new employees by 60 percent and requires state government to make its pension payments as a way to tackle years of pension underfunding, he added.
Markosek suggested the governor look at a natural gas severance tax, accepting full Medicaid expansion with federal aid and closing business tax loophole as the way to balance the next budget.
(Robert Swift is Harrisburg bureau chief for Times-Shamrock Communications newspapers. Email: firstname.lastname@example.org.)