Today’s Policy Brief outlined the overarching themes of the amended Act 47 Plan for the City of Pittsburgh. Those themes are (1) the Coordinator should not have opened the door for more tax increases and (2) fixing the legacy cost issue will be front and center on the agenda.
With 300 pages it is hard to cover the details in one Brief so upcoming Blog entries will delve a bit more into some of the interesting findings and recommendations in the Plan.
First, just how bad are Pittsburgh’s pension plans? We already know, when measuring by funded ratio (assets/liabilities) than Pittsburgh’s pensions are close to 30 percent funded. We know that Pittsburgh has more people collecting pensions than active employees paying into the system. And we know that there are various plans out there to solve the problem.
But here are two other interesting facts about the pensions from the report:
- A 2008 study by the Center for State and Local Government Excellence found that Pittsburgh’s pensions ranked 82nd out of 84 locally administered plans based on funding status. Only three other plans had funding levels below 50 percent.
- Based on the payments already made, the City still owes $400 million in debt service on the pension bonds (issued in the late 1990s) through the year 2024.
Those two facts show that not only is Pittsburgh low on funded ratio in Pennsylvania but across the nation, and that the City traded a temporary bump in pension funded ratio for more debt down the road.
