Allegheny County Executive Dan Onorato yesterday told municipal leaders that they should consider merging their pension plans or push for a state-run system for municipal pensions, if they hope to keep them financial viable.
"There is a lot of discussion going on about big-city pension plans in Harrisburg, but municipalities should be a part of that discussion and we here in Allegheny County should lead that effort," Mr. Onorato told about 200 municipal and school district officials who gathered at a pension summit.
The ongoing national economic crisis has drawn a lot of attention for destabilizing the pension plans of cities like Pittsburgh, Philadelphia, Harrisburg, Erie and Scranton. Mr. Onorato said the unfunded pensions of small municipalities around the state is just as big a problem, yet it is not getting a lot of attention
"One of the things we do well in Pennsylvania is produce a lot of municipal government," Mr. Onorato told the summit, which his office organized together with County Council, Treasurer John Weinstein and Controller Mark Patrick Flaherty.
"There are over 3,100 pension funds in Pennsylvania and about 60 percent of them have 10 people or less. That has to change. What we should be talking about is: Should there be a statewide municipal pension fund? And are we willing to give up some of our control?" he said.
When combined, all of the municipal pension funds account for $4.7 billion of unfunded pension liability, said Kevin Evanto, Mr. Onorato's spokesman. He added that the state Legislature would have to create a mechanism to allow for the merger of the municipal pension systems.
The benefit of consolidation, Mr. Onorato said, may save municipalities big market fluctuations. In the past few years, Pittsburgh saw its pension funding drop from having 44 percent of the required amount to 29 percent, he said, and the county's pension went from 94 percent funding to 80 percent.
What is more, Mr. Onorato said, municipalities, big cities and counties should start by "fighting special interest groups that keep lobbying Harrisburg to increase benefits and lower the retirement age."
"It's pretty hard to argue against increasing benefits, but the reality of the day is that we can't continue down this road," he said, noting that Allegheny County's retirement board has consistently lobbied Harrisburg to keep the retirement age where it is at age 60 with 20 years of service.
Correction/Clarification: (Published June 25, 2009) Allegheny County's retirement requirements are age 60 and 20 years of service. This story as originally published June 24, 2009 about municipal pensions listed an incorrect age.
Karamagi Rujumba can be reached at email@example.com or 412-263-1719.