A pension overhaul bill awaiting Gov. Tom Corbett's signature could save Allegheny County $1.1 billion over 50 years, officials said Thursday.
Presented to Mr. Corbett for his signature Wednesday, the bill sharply reduces the amount police officers and other uniformed county workers can "spike" their pensions, accumulating massive overtime in their final years to get a bigger payout.
Under the new rule, which would apply only to new hires, any overtime compensation above 10 percent of an employee's base pay would be ignored in calculating a pension payout. It's a tough pill that will save the county millions, proponents say.
"It's very important to stop some of the bleeding in the pensions that we have," said state Sen. Randy Vulakovich, R-Shaler, one of the bill's supporters. "We're in a time now where a lot of these pension plans are struggling greatly. If you're going to try to meet the promises made in these plans, there have to be some adjustments made."
Allegheny County's pension fund currently holds $812 million and is supported by about 7,400 active employees, who pay 8 percent of their salary into the account. About 4,100 retirees depend on the fund for income.
Altogether, the pension is 77.8 percent funded, retirement office executive director Timothy Johnson said.
The fact that Mr. Vulakovich, an ex-police officer, supports a measure that would hit his former colleagues in uniform is a testament to the precarious position many believe municipal pensions are in. A bankrupt Detroit showed the worst that can happen; Allegheny County Executive Rich Fitzgerald never wants to see the same happen here, despite the pension's relative strength.
"We want to keep it that way. We don't want to put it at risk later on," he said. "If you allow people to spike their overtime in the last couple of years of work and they're able to draw an excess amount, draining the system -- we would have put the system at risk."
Some in uniform disagree. Henry Wiehagen, president of the Allegheny County Fraternal Order of Police Lodge No. 91, met with Mr. Fitzgerald and Mr. Vulakovich months ago and told them what he's still saying now: If you pass this law, you're attacking the union's rights.
He said he believes any pension changes should be made through collective bargaining. He is considering asking the state FOP to file a legal challenge.
"You don't turn around and pass a law that restricts our right to bargain," he said. "I don't think any police officer wants to see their pension in trouble. I think they would even contribute more ... but it should be negotiable."
They soon may be paying more anyway. On Thursday, the county retirement board voted to raise the combined employee-employer contribution rate to between 18 percent and 20 percent, depending on how the legislation goes. The current rate is 16 percent.
Andrew McGill: firstname.lastname@example.org or 412-263-1497.