Pennsylvania’s Distressed Municipalities Could Take Pension Cues From Harrisburg, Says Report


Pennsylvania’s municipalities are collectively shouldering around $8 billion in unfunded pension liabilities, and nearly 50 percent of the state’s municipal systems are classified as “distressed”, according to a recent report from state Auditor General Eugene DePasquale.

Those distressed municipalities should look to Harrisburg – whose pension fund is currently running a surplus – for a roadmap to better funding, according to the same report.

From the Scranton Times-Tribune:

State Auditor General Eugene DePasquale recently cited Harrisburg’s success in funding its pensions despite its dire financial condition at a press conference.


Pension experts and municipal officials say many factors impact a pension fund’s health, so there is no simple explanation as to why Harrisburg’s pensions have thrived while [others] have faltered. There are clearly some things Harrisburg has done right.

Among the key factors:

* Pension funding: Harrisburg has fully funded its pension plans each year despite having the option to legally reduce its required contribution 25 percent because it, like Scranton, is an Act 47 distressed city.

* Disability rate: Harrisburg had one of the lowest rates of disability pensions for firefighters and police officers in the state, with just 3.3 percent of retirees receiving disability pensions as of Jan. 1, 2013, according to state data. Total payouts to those retirees equaled $274,938.

* Investments: With assets of $220.8 million, Harrisburg had ample money to invest, allowing it to earn a combined total of $24.8 million from its three funds between 2011 and 2013, state data shows.

* Super funding: Harrisburg put a significant cash infusion into the plans in 1995, when it obtained a $35 million pension bond.

Last week, DePasquale gave Gov. Wolf a series of recommendations for improving the funding of municipal pensions. The full report can be read here.


Photo by Governor Tom Wolf via Flickr CC License

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