In Pennsylvania Municipality, Pension Boards Sue City Over COLA Cuts

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In the city of Scranton, Pennsylvania, the pension boards representing the city’s police and firefighters this weekend sued the city to unfreeze retiree cost-of-living adjustments, which Scranton officials suspended in January.

The boards’ argument is a common one: the COLA raises were in workers’ contracts and approved by the pension boards; thus, the city didn’t have legal authority to freeze the raises.

The city says it does have legal authority, because an obscure piece of city code allows the suspension of COLAs if the pension funds aren’t “actuarially sound”. (Scranton’s pension system is severely distressed).

More from the Times-Tribune:

After the pension boards approved the raises late last year, the city threatened to block them. When the pension boards did not back down, city and council solicitors issued a directive on Dec. 29 to the pension plan administrator and trustee to not pay the raises and they complied.

Retiree raises were to coincide with 1.75 percent raises for active police and firefighters taking effect in January. Retired firefighters and police officers hired prior to 1987 are entitled to up to 50 percent of any increase granted to active duty personnel.

In the directive blocking retiree raises, city solicitor Jason Shrive and council solicitor Amil Minora cited state law, the 2A City Code governing Scranton. That law says retirement or cost-of-living increases “shall not be granted” unless the pension systems are actuarially sound and can afford them. They cited an October actuary report that declared Scranton’s pension funds financially unsound. They also noted that the state auditor general has described Scranton’s pension funds as the most distressed in the state and headed for insolvency.

The lawsuit seeks the following: a determination of whether the pension boards are authorized to pay retiree raises that have been the subject of contracts, ordinances and/or court awards; restoration of withheld raises; and an order barring the city from interfering in management of pension funds.

Read the full lawsuit here.

 

Photo credit: “Flag-map of Pennsylvania” by Niagara – Own work from File:Flag of Pennsylvania.svg and File:USA Pennsylvania location map.svgThis vector image was created with Inkscape. Licensed under CC BY-SA 3.0 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Flag-map_of_Pennsylvania.svg#mediaviewer/File:Flag-map_of_Pennsylvania.svg

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