Blog

Pension Audit Shows Few Surprises

Print Friendly, PDF & Email

The Auditor General’s office released the compliance audit for the City of Pittsburgh’s three pension funds yesterday.  The audit covers the years 2014 and 2015 and shows that the funded ratio of the plans–as reported to the now shuttered Public Employee Retirement Commission and detailed in our report on local pensions in Allegheny County in January of this year–Pittsburgh was 57% funded and at a level of moderate distress under Act 44 of 2009.

As noted in the audit the objectives were to determine if Pittsburgh officials corrected deficiencies from the 2015 audit (which covered 2012 and 2013) and to make sure the City was complying with all applicable laws, regulations, etc. related to municipal pensions under Act 205 and related state and local laws.

Critical to this discussion are the requirements of Act 44 and local ordinances of the City relating to pledging a stream of parking revenues through 2041 and the requirements of the gaming law of 2004 which direct local host fee money from the Rivers Casino to the oversight board which has the discretion to direct the money toward pensions, or debt, or retiree health care, or another purpose that it sees fit to do.  Both were satisfied in the audit period: in fact, since 2010, the City has put more than required into the pension plans, which the Auditor General saluted them for, while lamenting that the health of the fund slipped, having just stood at 58% at the end of the previous audit period.

The audit did show what would occur if the City adjusted its rate of expected return, which was discussed at the City pension board’s December 2016 meeting and in a blog last year.  The audit showed lowering the rate of return a percentage point, from 7.5% to 6.5%, would grow the net pension liability from $851.2 million to $971.2 million.  The pension board did lower the rate of return to 7.25% at its February meeting according to the board’s director.

Print Friendly, PDF & Email
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.

Subscribe to Our Newsletter

Weekly insights on the markets and financial planning.

Recent Posts