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.