Benchmarking Pittsburgh

City of Pittsburgh, know thyself. So goes the Socratic admonition.  Here’s some information to help in the self-knowledge. 

 

 

In order to see how the City performs on various measures of local government functions; how much it spends, taxes, how many people it employs, its legacy costs, and its authorities and schools, the Allegheny Institute in 2004 created the concept of the Benchmark City. The Benchmark City allows for an approximation of national norms of city governing by taking four regional hub cities from across the U.S. (Salt Lake, Omaha, Columbus, and Charlotte) and amalgamating them together to form a construct with which to gauge Pittsburgh’s performance.  After undertaking the initial analysis in 2004, we have updated the data in three year intervals and just recently released our 2013 report.

 

What did the 2013 analysis find?  An in-depth analysis can be found in the report, but here is a summary: on a per capita basis Pittsburgh spends more overall, collects more taxes and more non-tax revenue, and spends more on police and fire than the Benchmark City.  On the key measure of general fund spending, the gap between Pittsburgh and the Benchmark City was 46 percent ($1,539 to $1,051). When staffing levels are examined (on a per 1000 person basis), Pittsburgh is higher on total employees, total police, and total fire.  It has higher per capita debt obligations, a lower pension funded ratio, and pays out more in workers’ compensation.  City authorities employ many more people and have much more assets. Meanwhile, school spending and school taxes per person are considerably higher.  Overall, 2013 comparative results were not all that different from those found in the three previous Benchmark City reports as they took snapshots of budget and audited data at specific periods of time.

 

It is fair to say that positive change has occurred since 2004 when we first created the Benchmark City comparing Pittsburgh with cities of similar population size. Remember, that the City had just entered Act 47 recovery status and an oversight board like the one in Philadelphia was being discussed.  Gone are the business privilege and mercantile taxes, the $10 occupational privilege tax, and in their place are the payroll preparation tax and a $52 local services tax.  Act 47 status could be revoked based on the recommendations made by the recovery team in November of last year. 

 

With nearly ten years of benchmarking data on hand it is also possible to look back at 2004 and compare the relative standing of Pittsburgh to the Benchmark City now to see where the gap on certain variables has improved, stayed the same, or gotten worse.  There is good news. Pittsburgh has significantly improved its standing relative to the Benchmark City on pensions and debt.  In 2004, the funded ratio of Pittsburgh’s pensions was 43 percent lower than the Benchmark City.  By 2013, the gap had shrunk to 13 percent. Obviously the 2010 revenue plan crafted locally in response to the mandate by the state under Act 44 had a major impact. In 2004 the funded ratio in Pittsburgh was 51 percent and the Benchmark City 89 percent.  As Pittsburgh’s ratio climbed to 62 percent, the Benchmark City ratio fell to 72 percent, thus the combination of Pittsburgh’s improvement and the Benchmark’s poorer showing worked to close the gap. 

 

Then too, per capita debt, which was 233 percent higher than the Benchmark nearly ten years ago now stands at 64 percent higher.  Pittsburgh’s per capita debt fell by more than $800 while the Benchmark City debt rose by over $300 per person. If there is a strict adherence to reaching the debt to spending goal laid out by City Council (12% of spending taken up by debt by 2020) then improvement will continue in the future. 

 

Total staffing and fire staffing (per 1000 people) have also seen movement in a positive direction. Per capita school spending and per capita school taxes (which are not under the control of City officials in Pittsburgh or any of the cities that comprise the Benchmark, but are critically important) are still higher in Pittsburgh as of 2013, but again the relative standing between Pittsburgh and the Benchmark shrank since 2004.

 

That being said, the City’s per capita spending still remains close to 50 percent higher than the Benchmark,  now as it was did in 2004 and the gap between it and the Benchmark City on taxes is likewise the same (62% higher in 2004, 57% higher in 2013).  There is no noticeable difference in the staffing levels or asset holdings of related authorities which, again, are not directly part of any city’s government but perform services critical to taxpayers and have directors exclusively or partially appointed by city officials.

 

Did anything get worse since 2004?  The student population to city population (students per 1000 people) was 29 percent lower in 2013 compared to 20 percent lower in 2004.  Police staffing was 13 percent higher in Pittsburgh in 2004 and is now 24 percent higher. 

 

In sum, we conclude the Pittsburgh has made progress, but there is still much more work to do.  Whether there is one oversight group or two going forward, they will have to continue pressing the City for more restraint and downsizing of government.

What Has Happened to PA’s Largest Police Forces?

This question gets posed as new crime statistics for Pittsburgh are released showing a decrease in violent (Part 1) crimes. Data from the Pennsylvania State Police’s Uniform Crime Report shows crime stats, but also contains data on the fifteen largest local police agencies. Omitting county forces, the five largest municipal forces (measured by full time police officers) in 2010 were Philadelphia (6,734), Pittsburgh (887), Allentown (197), Harrisburg (179), and Erie (173). That’s a total of 8,170 officers in those five cities.

A decade earlier those five cities combined had 8,580 full timers, about 400 more. Obviously, populations of those cities has changed a bit, so it is more accurate to take a measurement of full time officers per 1,000 people in those two time frames.

All of those rates were down with the exception of Harrisburg, which was up slightly from 3.5 per 1,000 to 3.6 per 1,000. Probably not very noticeable as the city reported having eight more officers in 2010 than 2000. Pittsburgh, even with layoffs prior to Act 47 status and changes to post-retiree health care, which affected police, still carries roughly the same officer per 1,000 people with 3.1 in 2000 and 2.9 in 2010.

The Recovery Road Show

Friday marked the release of what will likely become the final Act 47 recovery plan for the City of Harrisburg and a lot of work lies ahead on debt levels, worker benefits, and financial management for the state’s capital community.

Is there anything Harrisburg can take from the largest city in Act 47 status, western Pennsylvania’s own Pittsburgh? A lot of the situation is going to be unique. But Harrisburg, like many local governments, is a labor-intense enterprise so much of the change on the cost side is going to be focused on headcount, salaries, and benefits. Based on the employee headcount and Census population, Harrisburg has 10.7 employees per 1,000 people this year. Five years ago the rate was 13.4; the City’s headcount fell while population bumped up. By comparison in Pittsburgh, where population fell and headcount went up a tiny amount over that same time frame, the per 1,000 person employee count stands at 10.9, up slightly from 10.6.

The similarity in employee to population right now is likely to diverge as the Act 47 plan comes into effect. As with many changes to employee benefits like post-retirement health care, change often comes to new hires. That’s what Pittsburgh did in 2005 when post-retirement health care coverage was ended for police and fire coming into the employment ranks and those retiring after the adoption of the plan would have higher coverage obligations. That too, is what is proposed for Harrisburg under their Act 47 plan.

Finally, on pensions the ability to collect benefits is virtually identical between the cities (50 years of age, 20 years of service for police and fire, though non-uniformed employees in Pittsburgh can retire with benefits at age 60 where in Harrisburg it is 65) but there is a big difference in the funding health of the plans. Pittsburgh has a funded ratio (AA/AAL) of 34% on average for its three plans, while Harrisburg has more assets than liabilities and has a funded ratio of 116%.