Pennsylvania Auditor Delivers Recommendations to Gov. on Municipal Pensions

Pennsylvania’s Auditor General on Tuesday turned in his recommendations to Gov. Tom Wolf for improving the funding of the state’s municipal pension systems.

Auditor General Eugene DePasquale was the head of a panel tasked with sketching out the funding solutions. The specific recommendations remain unclear.

From the Pittsburgh Post-Gazette:

Mr. DePasquale […] was tapped by the governor last month to lead a task force on municipal pension reform and make recommendations. He would not discuss specific provisions of the report but pledged that it would be “a comprehensive look” at the statewide situation.

“It’s going to look at ways to make it sustainable in the long term and … a path to getting it done,” said Mr. DePasquale, who has noted that about half of the state’s 1,223 municipal systems are in “distressed” status and that unfunded liability has grown by $1 billion over the past two years. “Every day that goes by, the solution gets more expensive, but, by the same token, you want to get it done right.”

He said more revenue alone won’t fix the problem.

“Before anybody talks about new revenue, the structure of the system needs to be sustainable first,” he said.

Unrealistic assumed rates of return, laws that allow municipalities to reduce or eliminate employee contributions, increasing life expectancy and early retirements, among other issues, are all drivers of unfunded pension liabilities, the auditor general has said. Additionally, pension benefits for public safety employees can be collectively bargained and are subject to binding arbitration that critics contend is weighted toward unions, with arbitrators not required to take into account a municipality’s ability to pay.

In the past, DePasquale has been an advocate of shifting new hires into hybrid plans; but Gov. Wolf is unlikely to support any strategy that significantly diminishes benefits.

Photo by Governor Tom Wolf via Flickr CC License