Pittsburgh City Council has new numbers in hand from the Pennsylvania Municipal Retirement System (PMRS) that shows adding either $110 million or $330 million in the next few years greatly reduces minimum yearly payments in the future. Council asked for the additional numbers as it tries to grapple with its underfunded pension program.
State law mandates that the city enter into the PMRS if it cannot get its pension fund up to the 50% funded level by the end of the year. Right now the fund is about 27% funded. If the city goes into the PMRS, the system would set “minimum municipal obligation” (MMO) levels that would bring the pension to 100% funded in 30 years. The first set of numbers showed payments averaging $120 million a year with peaks of $150 million or more in 2030. Mayor Luke Ravenstahl hoped to avoid the take over by using income from a 50-year lease of the Parking Authority’s assets to bring the fund up to the 50% level. Council rejected that plan. Council then countered with a plan to sell some city-owned parking assets to the Authority and use the proceeds to shore up the pension. Three of the mayor’s five appointees to the Parking Authority Board killed that plan.
Councilman Bill Peduto then asked the PMRS to show what would happen under several scenarios. One scenario has the city adding an extra $110 million to the pension in the next three years in an effort to reduce the MMOs in the out years. That scenario lowers the top payment $128 million in 2030. The additional money would come from funds currently in the pension but not accepted by the PMRS because of their risky nature, surpluses expected in future budgets and $45 million set aside by the council to be used for debt or pension payments. That money was the subject of a hot debate in council Monday.
Another scenario calls for the same $110 million over three years and an additional $220 million in 2014. That lowers the top payment in 2030 to $108 million. The additional $220 comes from the sale of a city owned parking garage, five surface lots and nearly 7,000 street meters to the Parking Authority, which would pay for them through the issuance of a $220 million bond. While Mayor Ravenstahl says he will not agree to such a deal, Peduto notes that there will be a mayoral election between now and 2014 and he speculates it could become a political issue.
Council members have not been available for comment today but in the past, Peduto has said that he feels the best option would be to enter the PMRS and make the additional payments. However, he has also said he would wait until he sees the new numbers before making his final decision.
See all of our Pension/Parking stories.