Pensions

Following the release of recommendations from Gov. Tom Wolf’s Task Force on Municipal Pensions, Pittsburgh Mayor Bill Peduto said that while the recommendations do not contain every pension change he’d like to see, it’s an important start.

“We wanted to see some movement on a hybrid model, defined benefit plan, and perhaps reform state Act 205 which gives funding to cities with distressed pension plans like Pittsburgh,” said Peduto’s spokesman Tim McNulty, “but, it was an important first step.”

AP Photo/Matt Rourke

A month after Republican lawmakers advanced a plan to end the traditional pension for new state workers, they’ve set their sights on doing the same for future municipal employees in Pennsylvania.

The cited reason for the change has been repeated in most debates over public pensions: People are living longer, and the annual pension payouts for city retirees are getting harder for municipal governments to afford.

Wolf Breaks Silence On His Ideas For Fixing Underfunded Municipal Pensions

May 15, 2015
AP Photo/Matt Rourke

Gov. Tom Wolf announced a four-person task force focused on municipal pensions – and suggested some tactics they might consider when deciding what to recommend.

Wolf had yet to say during his five months in office what, specifically, he thinks municipalities should do to deal with retirement systems underfunded by an estimated $7.7 billion.

Proposed changes to the state’s retirement systems would save the commonwealth $18 billion over 30 years, according to a fiscal analysis of the plan being fast-tracked in the state Senate.

Pennsylvania's in-house pension adviser said the immediate and long-term savings come largely from cutting benefits for current and future state and school employees.

“That’s how you save money in pensions,” said Jim McAneny, director of the Public Employee Retirement Commission. “You don’t pay out as much.”

The state Senate GOP's plan to change to the state's pension system is a heavy political lift that remains untested in the Legislature.

After months of silence on the details of a pension overhaul proposal, Republican leaders are gearing up for a fast and furious week. They expect to receive an actuarial analysis Tuesday on how much their proposed changes could save for the retirement systems' collective $53 billion liability. By the end of the week, they expect to hold a final vote on the bill. The measure would close the traditional pension system to any new workers and ask more of the employees enrolled in it now.

Irina Zhorov / 90.5 WESA

Homer City Police Chief, Louis Sacco, is one of just three people – two active and one retired – in his pension plan. He drives around the tiny borough, about 50 miles East of Pittsburgh, with views of looming power plant stacks in the distance and a partly shuttered Main Street.

Is It Fair For City Workers To Use Overtime To Spike Their Pensions?

May 6, 2015
Lindsay Lazarski / WHYY

At the end of 2011, the city of Allentown had a problem. There was a gaping hole in its fire department.

No, not a literal hole. Forty-three of its firefighters retired at once. Not only did the city lose wisdom and experience. But suddenly, it owed millions of dollars more every year in retirement benefits it couldn't afford.

Irina Zhorov / 90.5 WESA

Standing in a sun-drenched room, Jim Rosipal pointed to a framed assemblage on the wall. In it, a police officer’s uniform shirt, a medal for valor, a gas cap cover from the Harley Davidson he rode, and valve stem covers in the shape of little pigs. “Back in those days we were called pigs every now and then,” Rosipal said. “Didn’t bother us at all.”

State Rep. Peter Daley (D-Washington) believes he has part of the solution for the $41 billion unfunded state pension crisis in Pennsylvania.

Daley says that if the retirement age for teachers and state workers was lowered it would save the state money by phasing out higher paid teachers, and bring in new lower paid teachers with a 25 percent reduction in pensions.  

Irina Zhorov / 90.5 WESA

Municipal pension funds in Pennsylvania are underfunded by a combined $7.7 billion, and many local lawmakers are pointing to state-level reforms as the solution. 

The State House of Representatives’ Urban Affairs Committee met with local leadership in Pittsburgh Monday to learn about what exactly municipalities want to see happen in the state Legislature.  

Pittsburgh Mayor Bill Peduto compared the municipal pension problem to a sinking boat.

Despite putting revenue from parking and the Rivers Casino into the pension fund, Pittsburgh’s pension problems aren’t getting any better.

That’s according to a recent audit that showed as of January 2013, Pittsburgh’s pension fund had assets of $675 million, but the liabilities stood at $1.16 billion – meaning the city only has about 58 percent of what it needs in the pension fund in order to ensure current and future payments compared to 62 percent in 2011.

http://www.senatorschwank.com/

Pennsylvania’s multi-billion dollar public and municipal pension issues have long been cited by lawmakers as an obstacle to economic growth. To address pensions, Senator Judy Schwank (D-Berks) has introduced a bill that would create the Public Pensions Review Commission.

“To examine the current systems, and to recommend statutory or regulatory changes needed to achieve and maintain a sound, stable public pension structure for both the state and for local governments,” said Schwank.

The 25-member group would be authorized to conduct hearings and receive appropriate information and analysis. Some of the questions to be addressed, said Schwank, are what does Pennsylvania’s future workforce like? How can the state attract and retain talent, and how can the state achieve retirement security?

Deanna Garcia / 90.5 WESA

Mayor Bill Peduto said that for too long the city has had a "Kennywood approach" to pensions — with ups and downs and warnings and signals about their viability and effect on city budget.

In an effort to ensure the pension plans for police, firefighters and municipal employees do not become a financial liability, Pennsylvania Auditor General Eugene DePasquale has launched an audit of those plans. Peduto joined the auditor general for the announcement, saying it’s time to dig deep into Pittsburgh’s numbers.

Liz Reid / 90.5 WESA

“We’ve been through a lot.”

That’s how Pittsburgh Mayor Bill Peduto began Monday’s press conference, where he unveiled his 2015 budget proposal, as well as a five year plan to solve the city’s financial problems.

The theme of the morning was “truth in budgeting,” something Peduto and budget director Sam Ashbaugh said had been missing from previous administrations’ approach to revenue and spending.

Liz Reid / 90.5 WESA

Less than a week after Pennsylvania Gov. Tom Corbett ended the budget standoff with the state Legislature, he’s setting a new deadline for pension reform: election season.

Corbett was in Shaler Township Monday afternoon pushing an overhaul of the public pension system, which he said is necessary to help struggling school districts and stem the wave of rising property taxes.

Explaining Governor Corbett's Budget Battle

Jul 2, 2014
Capitol Media Service

Budgets often lead to some of the most contentious battles within government, and the approval for the Pennsylvania’s $29.1 billion budget is shaping up to follow suit.

The budget was approved by lawmakers on Monday night, hours before the end of Pennsylvania’s fiscal year, but Governor Tom Corbett refused to sign the budget sent to him.

He said he would withhold his signature until the General Assembly made a decision regarding pension cuts, adding that the budget “does not address all the difficult choices that still need to be made.”

Gov. Tom Corbett is holding off on signing the $29.1 billion commonwealth budget approved by state lawmakers Monday evening.

The announcement came just after the final vote on the spending plan, which includes no new taxes but leans heavily on one-time revenue sources and hopeful revenue forecasts.

In a written statement, the governor took issue not with anything in the spending plan, but with the Legislature’s failure to pass another one of his top priorities: changes to public pension benefits for future state and school employees.

Pittsburgh City Council members heard from the public Monday about the third amended recovery plan for the city.

Pittsburgh has been under financial oversight for a decade. The amended plan, aimed at getting the city out of Act 47 status and closer to financial solvency, sets novel goals: to reduce the city’s deficit and debt burden, maintain the fund balance at an appropriate level, increase pension contributions and spend more on capital construction.

Pittsburgh’s Recovery Coordinators have submitted a new plan – the third since the city has been under distressed Act 47 oversight – to get the city into solvent financial shape.

In addition to eliminating operating deficits and reducing the city’s debt payments, the latest plan to get Pittsburgh out of commonwealth oversight focuses on beefing up the employee pension fund.

New Jersey and Pennsylvania are caught between a rock and a hard place: The budget shortfalls that make deferring pension fund contributions so tempting, and the credit downgrades that await them if they skip more scheduled payments on ballooning pension debt.

Pittsburgh City Controller Michael Lamb said Thursday’s board vote to lower the pension fund’s projected rate of return was good financially for the city.

The fund’s assumed rate of return was lowered from 8 percent to 7.5 percent after a 5-2 vote led by Mayor Luke Ravenstahl's allies. Supporters of Mayor-elect Bill Peduto then accused Ravenstahl of political maneuvering.

Ravenstahl was opposed to lowering the rate during most of his tenure.

Mayor-elect Bill Peduto saw his plan to offer early retirement to some city employees move forward in City Council Monday.

The plan would allow 136 city employees, whose age plus years of employment equals 70 years, to begin collection their pensions early. Currently that number has to equal 80. The employees must also be at least 50 years old and have no less than 8 years of service to the city.

Peduto says this is all part of his vision for a major shakeup at City Hall.

A City Council vote on Mayor-elect Bill Peduto’s plan to incentivize the early retirement of roughly 400 city employees has been delayed once again, and may even have hit a major snag.

Councilman Ricky Burgess wants to tie the bill to increased funding for the Pittsburgh Summer Youth Employment Program, or PSYEP.

Burgess said it’s a matter of priorities.

One state lawmaker is proposing to create a statewide pension plan for municipal police officers.
    
The plan would not include automatic boosts in benefits known as cost-of-living adjustments and would mandate a 7.5 percent contribution from members.

Republican state Rep. Glen Grell of Cumberland County, head of the House GOP pension reform task force, said the statewide pension plan would only be optional for current local officers.