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Legislative Session Resumes With Hearing on Municipal Pensions

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Both chambers of the General Assembly reconvene Monday afternoon, but this morning there will be a joint hearing on municipal pensions held by the committees on Local Government from the House and the Senate.  There is no specific agenda for the meeting beyond the topic itself, which is a critical and quite broad one.

As we noted as far back as 2007, there are over 3,000 separate municipal pension plans in the state, with municipalities administering them at the local level under state law and dividing them up by class of employee and by benefit type.  Far and away the majority of plans are defined benefit in nature.

Is the hearing expected to discuss possible reforms?  Consider that it is less than a year away (January 1, 2019) from when new state hires will begin to pick from a menu of pension plan options as a way to gradually lower the pension costs incurred by the state.  School employees will follow suit in July of 2019.  This year marks nine since the last significant municipal pension reforms under Act 44 took effect.  Are state legislators thinking of revisiting the nature of municipal pension benefits?  Certainly there have been calls for increasing retirement age and/or length of service for normal retirement benefits at the municipal level, and possibly moving new non-uniformed employees into defined contribution plans.  The Mayor of Pittsburgh recently made such a request.

Since Act 44 the only major change came with the closure of the Public Employee Retirement Commission and the transfer of those duties to the Auditor General’s office, which is now in charge of municipal pension reporting (the Office was already distributing state pension aid). Does the General Assembly want to look at the levels of pension distress designed by Act 44? The good news is that very few municipalities have a severe distress score (49% or less funded ratio) the bad news is that the state’s largest city (Philadelphia) and some other larger ones (Scranton and Chester) are at that level as of the 2016 scoring.

Is there a possibility that the state wants to put new municipal hires in a unified pension system so that like PSERS (public school employees) no matter where the employee works they are in a unified statewide system for local employees?

There are numerous possibilities of where things could go in the joint hearing if the committees are looking at big issues.

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Allegheny Institute
Allegheny Institute

The Allegheny Institute is a non-profit research and education organization. Our mission is to defend the interests of taxpayers, citizens and businesses against an increasingly burdensome and intrusive government.

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