Six years ago we released a full-length report on the finances of Johnstown, PA, a municipality that has been in Act 47 distressed status since 1992. In 2010 the City began the year with layoffs and a tax increase and the possibility of a municipal bankruptcy was raised.
That never happened, though the City is now on its 6th amended recovery plan (2013) and that plan pointed out that there were pension issues that the City was facing. More retirees than active workers (252 to 139 that year) and the aggregate funded ratio of the City’s plans steadily eroded from 2003 through 2011, falling from 57% to 47%. In 2009 the state passed municipal pension legislation (Act 44) that included placing levels of distress on a municipality’s pension plans, meaning Johnstown would have reached “severe” by 2011.
It is at that point that the state Auditor General’s office picked up with an audit on the City’s pension plans, and the health of those plans and points out a dire situation: “The city keeps draining money from other municipal services and keeps relying residents to pay for this enormous pension burden. Yet, the city keeps losing ground.”
The audit notes that despite being in severe distress and having mandatory remedies prescribed by Act 44 the only change that the City made was to place age and service length requirements for police officers hired after March of 2010. A pension recovery plan has not been implement nor submitted to the Public Employee Retirement Commission, according to the audit. The audit also found pension provisions that were out of compliance with the Third Class City Code of the Commonwealth and recommended changes.
