Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Auditor General Reforms Include Management of Pensions by State

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Auditor General Reforms Include Management of Pensions by State

Article excerpt

State Auditor General Eugene DePasquale, charged in May with heading a task force on municipal pension overhaul, delivered a series of "realistic and responsible reforms" to the governor Tuesday that include shifting hundreds of distressed plans into a state system for management purposes.

For Pittsburgh, which narrowly avoided a state takeover of its pension plans in 2010, the task force recommendations include giving the city the option of doing the same, though Tim McNulty, a spokesman for Mayor Bill Peduto, said any such move would come years down the road.

Pittsburgh and Philadelphia, which would also have the option of joining the state system, together account for about $6 billion of the nearly $8 billion in unfunded municipal pension liability statewide, though Philadelphia is responsible for the vast majority - about $5.3 billion to Pittsburgh's roughly $500 million, according to the Auditor General's Office.

"It's going to take years of planning and looking at costs for the city, but we wanted that option on the table," Mr. McNulty said, adding that the lower anticipated rates of return used by the Pennsylvania Municipal Retirement System for now would mean an insurmountable cost barrier to the city shifting its plans to the state.

However, by 2019, when the city's debt service payments are expected to be cut in half, it may be a more attractive proposition.

Among the other major recommendations in the task force report for the state's 1,223 municipal plans are increasing penalties for cities, boroughs and townships that do not pay their full minimum municipal obligation; prohibiting state aid from being used to pay administrative expenses; excluding pensions from the collective bargaining process; and requiring public posting of pension costs and disclosure of pension liability. …

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