Pension Plans in Smaller Municipalities in Allegheny County Healthy Even in the Midst of Recession

Jan 10, 2012

Given ongoing struggles with Pittsburgh's pension funding, the Allegheny Institute for Public Policy decided to examine how the other 129 municipalities in the county are faring with their plans. Using the most recent pension plan data available, which was from 2009, the institute found that overall, smaller municipalities were doing quite well, with only three of the plans funded below 50 percent.

"In a lot of cases we had them at 100 percent funded and the vast majority of them were 75 percent funded or better," said Frank Gamrat, senior research associate with the Allegheny Institute. "Keeping in mind that the City of Pittsburgh, their non-uniform pensions were funded less than 40 percent, their police and fire were also funded less than 40 percent, so our smaller municipalities were doing much better than the city of Pittsburgh."

And that, he said, is impressive considering that 2009 fell in the middle of the recession. Gamrat added, the health of smaller pension plans is good news for a couple of reasons.

"The retirees in those municipalities can rest comfortably and safely knowing they're still going to get paid, and as far as taxpayers go, they don't have to worry about putting extra money in to bring those pensions up," he said.

He points to Pittsburgh, which he said had to rely on some "creative financing" to get pensions up to 50 percent. Most notably, said Gamrat, the city's move to pledge parking tax revenues to raise pension levels and avoid state takeover of the plan. As for why the smaller municipalities are faring better, that remains a question.

"We did not look into the underpinnings of how they're being managed or who's managing them," said Gamrat. "My guess is since they're smaller municipalities, they may have private companies managing them, whereas the City of Pittsburgh tends to do it on its own. I can't say for certain why they're doing better, but they are."