Auditor General DePasquale Says Despite Recent City Actions, Pittsburgh Municipal Pension Fund Continues to Show Stress
Auditor General DePasquale Says Despite Recent City Actions, Pittsburgh Municipal Pension Fund Continues to Show Stress
Repeats call for legislative action to solve growing statewide municipal pension woes
PITTSBURGH (March 4, 2015) – Auditor General Eugene DePasquale said that despite laudable actions by the Peduto Administration to shore up the city’s pension plans and an improving stock market, a recent audit shows that the pension fund’s overall funding ratio dropped from 62 percent in 2011 to 58 percent in 2013. The audit prompted the auditor general once again to call for action at the state level to resolve a growing statewide challenge with the stability of municipal employee pension plans.
“While Pittsburgh’s pension challenge does not even approach the problems we are seeing in Scranton, where that city’s pension plans could run out of money in less than three to five years, we are concerned about the long-term financial stability of the City of Pittsburgh Comprehensive Municipal Pension Trust Fund,” DePasquale said at a news conference with Mayor Bill Peduto.
“I applaud efforts the Peduto administration is taking to shore up its pension, but I fear that even as the city is contributing more than it is currently required it is simply not going to be enough. We need a comprehensive solution to the growing statewide municipal pension challenges for the sake of the taxpayers, our police, firefighters, and other municipal employees, and for the very future of our cities and towns.”
DePasquale noted that as of Jan. 1, 2013, the Pittsburgh pension fund has assets of $675 million and liabilities – the amount needed to ensure current and future pension payments – of $1.16 billion. Part of the funding ratio drop can be attributed to the city lowering it assumed rate for return from 8 percent to 7.5 percent.
“This audit represents a significant turnaround in Pittsburgh because it appears that the city is working hard to resolve its pension problems,” DePasquale said. “They are specifically addressing our recurring recommendations in findings one and two to ensure that the plans’ governing documents properly reflect all benefit obligations.”
The audit report includes four findings related to benefit calculations and data accuracy for state aid certification.
The city agreed with the audit findings and has already taken steps to improve internal administrative oversight and has drafted ordinances to correct pension benefit calculation discrepancies.
In January, DePasquale released an updated version of his statewide municipal pension report that includes 13 recommendations that could be considered to address the underfunding of municipal pension plans and the systemic issues associated with the administration of the plans.
The City of Pittsburgh pension audit report is available online here.
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