There may be frost on the pumpkin before Pittsburgh residents find out if the last minute pension maneuvering by City Council was enough to retain local control of the city’s pension funds. Members of Pittsburgh City Council passed a series of bills in the waning days of 2010 aimed at bringing the pension program up to the 50% funded level by the end of the year. The final plan promised to dedicate 31 years worth of parking taxes to fund. Supporters of the plan hope the present-day value of the $736 million in tax revenue, coupled with 45 million that had been held in reserve would be enough to boost the pension program from about 30% funded to the 50% mark. If the plan falls even a few thousand dollars short the state will force the city to hand over control of the fund to the Pennsylvania Municipal Retirement System. Such a move is expected to lead to higher yearly minimum payments into the fund.
Pittsburgh now has until September 1st to send the actuarial valuation report to the Pennsylvania Public Employee Retirement Commission. PERC is charged with placing a value on all 3,200 municipal retirement funds in the state on a semi annual basis. The same law that forced Pittsburgh to bring its pension program up to the 50-percent funded level set the reporting deadline. PERC Executive Director James McAneny says, “The valuation report shows what the liabilities of the plan are and what the assets of the plan are among other things but those are the primary issues that have to be addressed in determining the plan’s funded ratio.” Council has passed a resolution asking the City Controller’s office to make a assessment of the present day value and present it to the city’s pension board.
When municipalities submit their valuation reports the data is reviewed by PERC. “Under normal circumstances we don’t usually have problems with the actuary’s numbers but in this particular case, with the rather exceptional circumstances, it will get a little extra look,” says McAneny. McAneny says it will take about a month to review the data once it is submitted by the city.
The roll of the PERC is limited to reviewing the assets. It does not look at the wisdom of any investment. That includes the use of a present-day value of a future revenue stream. “I’m not here to say I like it as a tool, especially for pension investments but it’s legal. And that’s all I'm allowed to make a determination on,” says McAneny.