The Pennsylvania Auditor General’s Office recently published distress scores for municipal pensions.
Act 44 of 2009 established distress scores for municipalities (cities, boroughs, townships, municipal authorities, regional police forces, dispatch centers and other associations) based on the health of their pensions.
A municipality’s distress score is determined by the aggregate funded ratio (assets divided by liabilities) of all pension plans provided by the municipality. Scores are published biennially based on the actuarial reports of the previous year. In other words, 2024’s scores are based on the January 2023 valuations.
Scores were assigned to 1,403 municipalities statewide. A score of no distress was given to 1,053 municipalities (75 percent). Five municipalities had a score of severe distress, ranging from 49 percent to 11 percent funded.
Of the 135 municipalities scored in Allegheny County, none were in severe distress. There were 111 municipalities at the level of no distress, 21 at the level of minimal distress and 3 at the level of moderate distress.
The City of Pittsburgh, with $1.06 billion in assets and $1.52 billion in liabilities, achieved a 70 percent funded ratio and just made it to the low end of the minimal distress range. According to the 2023 Annual Comprehensive Financial Report, between the city’s non-uniformed, police and fire pension plans there were 3,292 active members compared to 4,359 inactive members or beneficiaries receiving benefits or inactive members that were not yet receiving benefits.
Two of the three Allegheny County municipalities that exited Act 47 fiscal distress status in 2023—Duquesne and Rankin—had a score of no distress. Braddock also left Act 47 last year and was one of the three moderate distress scores.
Overall municipal pension plans in Pennsylvania are in good shape 15 years after the state crafted the distress score framework.
