Auditor General DePasquale Releases Audit of Municipal Pension Plans for City of Erie

October 27 2015

Auditor General DePasquale Releases Audit of Municipal Pension Plans for City of Erie

Says city’s pensions are fairly stable, but payments take up greater and greater portion of city budget 

ERIE (Oct. 27, 2015) – Auditor General Eugene DePasquale today released the aggregate audit report for the police, firefighter, and non-uniformed municipal pension plans in the City of Erie. 

“While Erie’s municipal pension plans are actually doing better than those of other larger municipalities, pension payments are consuming a larger and larger portion of the city’s budget,” DePasquale said. “Erie –as with so many other municipalities in Pennsylvania – needs relief from the growing pension burden.

“The sooner we can collectively address chronic pension issues, the better able municipalities will be to improve the integrity of their pension plans without breaking the backs of taxpayers and pulling precious funds from public safety budgets.” 

The recently completed audits found that the funding ratio for two of Erie’s three employee pension funds decreased slightly from 2011 to 2013, while the non-uniformed officers’ and employees’ plan remained stable:

A pension fund is considered minimally distressed when its funding ratio falls between 70 and 89 percent; moderately distressed when it falls between 50 and 69 percent funded; below 50 percent funded is considered severely distressed.

Erie’s combined unfunded pension liability was $81.3 million in 2013, a $15 million increase since 2009. The city’s annual contributions to its three pension funds grew from $7.65 million in 2009 to $10.16 million in 2013.

“We see municipalities of all sizes facing pension challenges and it seems clear that there needs to be a comprehensive solution that includes structural changes to the pension system and the leadership to make effective changes,” DePasquale said.

Since becoming auditor general, DePasquale raised pension funding concerns in municipalities across the state, including recently in York, Scranton, Pittsburgh, and Coatesville. 

In fact, the auditor general’s latest statewide local government municipal pension report found that nearly half of the employee plans statewide are in distress. Overall, there is nearly an $8 billion unfunded municipal pension liability. The report shows that 562 of the 1,223 municipal pension plans are distressed, or 46 percent of the plans.

In May, DePasquale was appointed by Gov. Tom Wolf to lead a Task Force on Municipal Pensions. On June 30, DePasquale delivered the task force’s report to the governor offering realistic and responsible reforms to address problems with Pennsylvania’s system of local government retirement plans. 

“I will continue to point out these issues in the hopes of correcting this enormous unfunded pension liability and to guarantee the money is there for the people who earned it,” DePasquale said.

The City of Erie Aggregate Pension Fund audit report is available online here. 

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