Issue Summary (Updated May 2012)
Pittsburgh's Financial Overseers

The Issue:

The City of Pittsburgh has been in Act 47 distressed status and under the watch of an oversight board since 2004.

What We Know:

Act 47 is an open-ended designation—a municipality is in it until the Secretary of DCED determines that it has erased the conditions that led it into Act 47 in the first place.  Only six municipalities that were in Act 47 have emerged from distressed status.  Pittsburgh petitioned for release in 2007 but the request was denied.  Following the denial an amended recovery plan was written for the City, focusing on the legacy cost burden confronting the City.

In addition to the Act 47 team, there is an oversight board created by Act 11 of 2004 and modeled on the agency assisting Philadelphia with its finances. As intended in the statute, the oversight board would “operate concurrent and equally” with the Act 47 Recovery Team. The five directors of the oversight board were appointed by the leaders of the House (2), Senate (2), and the Governor (1). The appointees were required to have “substantial experience in finance or management” and were to be either residents of Pittsburgh or have their primary place of employment in the City.  

The City has expressed its opinion of late that it has done enough and should be released from state supervision of its finances, presumably meaning both the Act 47 team and the oversight board. 

Recommendations:

The City still has a long way to go on legacy costs.  Much attention was paid to the pension problem, and the City has tried to avoid taking on new debt as its per capita level of indebtedness is very high compared to other cities.  It also has a close to $500 million level of unfunded liability on its post-retirement health care and is high on workers' compensation.  Obviously the state wants to see these issues corrected and it is hard to see how financial oversight could be ending anytime soon.