City council to vote on trust fund for retirees' health care
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Legislation to be introduced in Pittsburgh City Council today would create an irrevocable trust fund for city retirees' health care benefits -- a step demanded by a financial oversight board that's withholding approval of the 2012 budget.
The state-appointed oversight board, the Intergovernmental Cooperation Authority, last month rescinded approval of the budget and five-year spending plan. The ICA said the city hadn't created the trust fund or met other conditions that overseers imposed last fall.
Today's legislation would direct the city finance department to set up the trust fund, appoint a bank as custodian, formalize a charter and appoint three city officials as trustees. The trustees would be the city solicitor, the finance director and the personnel director.
The legislation says $2.2 million will be deposited in the fund this year.
The city's accrued liability for post-retirement benefits totaled $320.4 million in 2006, according to the city's amended financial recovery plan, adopted in 2009. A more recent figure was not immediately available.
While the city has chipped away at the obligation -- making payments of $300,000 in 2010 and $500,000 last year, for example -- overseers want the city to step up contributions and create a cookie jar for the money.
In a Dec. 23 letter to Mayor Luke Ravenstahl, the ICA cited various reasons for rescinding approval of the 2012 budget and five-year plan, including the city's need to establish the trust fund, allocate an "appropriate sum" and provide assurances that the fund won't be raided at some point for other spending needs.
While the city is still doing business and paying bills despite the budget dispute, the ICA says the city cannot proceed with a proposed bond refinancing and $80 million in new borrowing until its concerns are addressed. Mr. Ravenstahl's office has said the borrowing -- considered key to the city's 2012 and 2013 capital plans -- can take place without the authority's approval.
Mayoral spokeswoman Joanna Doven said Friday that representatives of the city and the ICA will meet again this week to address the latter's concerns.
A second oversight board, the Act 47 recovery team, also has pressed the city to create the trust fund. The issue received prominent mention in the team's annual report last fall.
Ms. Doven said the city and the county today will launch a shared financial management system intended to increase efficiency and transparency. Both oversight boards wanted the city to participate in that project.
First Published January 17, 2012 12:00 am
