The idea to lease Pittsburgh’s parking assets in order to fund the city’s pension plan is still alive -- and now on its way to Harrisburg.
Councilman Ricky Burgess wrote a letter to Governor Tom Corbett, asking him to allow Pittsburgh’s state overseers (the Intergovernmental Cooperation Authority) to lease the city’s parking garages if Council does not do so by the end of the year.
The District 9 Councilman says under the parking lease plan, Pittsburgh’s pension plan could be fully funded in 17 years. Burgess was the only Council Member to support the lease plan proposed by Mayor Luke Ravenstahl.
Burgess also introduced legislation today that would set up an independent panel of actuaries and accountants to determine the balance of the pension fund.
That panel would also decide whether Council’s December 2010 infusion of parking tax revenue into the pension will save it from being taken over by the Pennsylvania Municipal Retirement System.
Burgess says Council won’t make the tough choices necessary to fix the city’s pension problem, so he’s asking Pittsburgh’s state overseers to make that choice instead.
Showing posts with label pensions. Show all posts
Showing posts with label pensions. Show all posts
Tuesday, May 31, 2011
Tuesday, May 24, 2011
Audit: Pgh Pension Plan Needs Funding Now
Pennsylvania Auditor General Jack Wagner is releasing an audit of Pittsburgh’s pension plan for police, firefighters, and non-uniformed city workers today.
The document says the plan is only 34% funded, or $650 million short of its total $990 million, as of the last day of 2009.
Wagner says although City Council has already implemented a “bailout plan” that would divert parking tax revenue to the pension fund, that ordinance has not been adopted by the Pittsburgh Parking Authority.
Wagner says the city must boost its total pension assets to the halfway mark before September 1, or the Pennsylvania Municipal Retirement System will likely force the city into making higher yearly payments -- no matter where the money comes from.
“It may be done with parking revenue; it could be done with increased taxes; it could be done by the city cutting services in one area,” says Wagner.
Wagner says in the meantime, the continuing pension gridlock is creating problems.
“The image of Pittsburgh is very important, and the longer this discussion ensues, the more negative impact it has on Pittsburgh in a real and a perceived way,” says Wagner. “In a real way in terms of the bond rating [dropping].”
Wagner says Pittsburgh’s pension fund is one of the worst-off in the state, and funding it to 50% will be only a small step in covering the $650 million deficit.
The document says the plan is only 34% funded, or $650 million short of its total $990 million, as of the last day of 2009.
Wagner says although City Council has already implemented a “bailout plan” that would divert parking tax revenue to the pension fund, that ordinance has not been adopted by the Pittsburgh Parking Authority.
Wagner says the city must boost its total pension assets to the halfway mark before September 1, or the Pennsylvania Municipal Retirement System will likely force the city into making higher yearly payments -- no matter where the money comes from.
“It may be done with parking revenue; it could be done with increased taxes; it could be done by the city cutting services in one area,” says Wagner.
Wagner says in the meantime, the continuing pension gridlock is creating problems.
“The image of Pittsburgh is very important, and the longer this discussion ensues, the more negative impact it has on Pittsburgh in a real and a perceived way,” says Wagner. “In a real way in terms of the bond rating [dropping].”
Wagner says Pittsburgh’s pension fund is one of the worst-off in the state, and funding it to 50% will be only a small step in covering the $650 million deficit.
Thursday, March 31, 2011
ICA Faces He Said - She Said on City Budget
The members of the Pittsburgh Intergovernmental Cooperation Authority sat looking a bit befuddled this afternoon as City Councilman Bill Peduto read to them a letter he wrote to the mayor regarding parking revenue. The ICA requested that City Council Finance Committee Chairman Bill Peduto come before the board to explain why the city’s budget was sliding out of balance. The mayor had recently brought up the issue of less than expected payments from the Pittsburgh Parking Authority. The money is expected to help make payments to the city’s pension fund. Peduto laid the issue squarely at the feet of the Parking Authority Board, which he says is the only body that can raise parking rates and install new parking meters as is required. Peduto says the budget does not anticipate the $1.3 million in payments in lieu of Taxes (PILOT) until the 4th quarter. The idea was to allow the Authority time to get the new rate structure in place and install new parking meters capable of collecting the higher charges.
During the pension and parking debate last year, the council set a new parking rate schedule that Peduto says more than covers the increased PILOT. “There is an additional amount that goes directly to the Parking Authority so they can afford things like maintenance and improvements. It’s not as if we are just raising the rates or proposing to raise the rate just to break neutral,” says Peduto.
Peduto says the board should act quickly so it can bring in much more than the 1.3 million anticipated.
At the same time, Ravenstahl Administration Budget Director and Parking Authority Chair Scott Kunka says the Authority cannot simple act on numbers that were part of an ongoing debate in council. “A prime architect of the council plan, Councilwomen Rudiak, is a member of the Parking Authority, now we’ve had three meetings already this year and she has not once brought this mater up to the Parking Authority Board,” says Kunka. Kunka says they need to hear directly from the council what the proposed rate structure should be.
ICA Board Chair Barbara McNees says, “ We are going to have to do some analysis on this, see where everybody is on this, talk to [Peduto] talk to the mayor and see where the division of responsibilities lie.” It is not the ICA’s job to determine parking rates but it is responsible for making sure that the budget stays in balance. “The budget as passed depends on the implementation of some of this,” says McNees, “If that s not going to occur, we don’t want a budget that’s out of balance… so those are the questions we need to ask.”
Download a copy of the letter Councilman Peduto read into the ICA record here.
Friday, March 4, 2011
60% of Pensions In Allegheny County in Good Shape
Much attention was paid over the last year to the city of Pittsburgh's pension plan and efforts to get it to at least 50% funded to avoid a takeover by the state. But there are nearly 300 separate pension plans in Allegheny County.
Pittsburgh has until September 1 to provide the actuarial numbers to the Pennsylvania Public Employee Retirement Commission which will determine if the city's plan does boost the value to at least 50% of obligations.
A new study of all the plans in county by the Allegheny Institute for Public Policy shows that nearly 60% of the plans are in good shape with a funded ratio of assets versus liabilities of 90% or higher. Senior Policy Analyst Eric Montarti says the nearly 300 pension plans cover workers employed by the county, the city of Pittsburgh, numerous boroughs and townships, plus authorities and associations ranging from "the 7,000 plus members of the Allegheny County system to a handful with just one employee." Teachers are covered by a separate, state-run pension plan.
The report by the conservative think tank indicates 8 of the plans, including 3 administered by the city of Pittsburgh, are less than 50% funded.
According to Montarti there are lots good plans that are in good shape, "the key is to look at what an Allegheny County retirement system (merging the plans) would look like versus the way it is now. Are we better off keeping them separate, or if there is some consolidation, how would that look?"
Montarti says that more than 80% of the plans in the county are defined benefit which is a guaranteed amount at retirement based on rate of pay and years of service.
Many pension reformers want to switch to a defined contribution plan where the employee and employer each contribute a certain percentage and the total value is determined by market performance.
Pittsburgh has until September 1 to provide the actuarial numbers to the Pennsylvania Public Employee Retirement Commission which will determine if the city's plan does boost the value to at least 50% of obligations.
A new study of all the plans in county by the Allegheny Institute for Public Policy shows that nearly 60% of the plans are in good shape with a funded ratio of assets versus liabilities of 90% or higher. Senior Policy Analyst Eric Montarti says the nearly 300 pension plans cover workers employed by the county, the city of Pittsburgh, numerous boroughs and townships, plus authorities and associations ranging from "the 7,000 plus members of the Allegheny County system to a handful with just one employee." Teachers are covered by a separate, state-run pension plan.
The report by the conservative think tank indicates 8 of the plans, including 3 administered by the city of Pittsburgh, are less than 50% funded.
According to Montarti there are lots good plans that are in good shape, "the key is to look at what an Allegheny County retirement system (merging the plans) would look like versus the way it is now. Are we better off keeping them separate, or if there is some consolidation, how would that look?"
Montarti says that more than 80% of the plans in the county are defined benefit which is a guaranteed amount at retirement based on rate of pay and years of service.
Many pension reformers want to switch to a defined contribution plan where the employee and employer each contribute a certain percentage and the total value is determined by market performance.
Monday, January 17, 2011
Pension Valuation Could Take Months
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.
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.
Wednesday, January 5, 2011
Council Tells Controller to Update Pension Board
Pittsburgh City Council members want the City Controller to make a formal presentation to the board that oversees the city’s pension funds to make sure the members understand the value of what is being dedicated to the program. As 2010 came to a close, council settled on a plan to add $45 million in reserve funds to the pension program and at the same time dedicated more than $700 million in parking tax revenues over the next 31 years. The belief is that the funds have a large enough present-day value to boost the pension program to the 50-percent funded level and avoid a state take over. The bill calls for a two-step process. “It requires the Controller to make a calculation of the present value of the revenue dedicated in the ordinances “and with the Council President make a presentation to the board,” says Councilman Patrick Dowd.
Dowd stresses that the Council and the Controller are not obliged to make the presentation. He calls the move “house keeping,” “dotting the I’s and crossing the T’s” and “an effort to be respectful.”
The board and its actuaries will set a value of all the assets in the fund as of December 31st, including the new revenue stream, in the coming months and then submit it to the state for final approval. If the fund falls short of the 50% level it will be taken over by the state and the assets will be handed over to the Pennsylvania Municipal Retirement System. It is expected that the PMRS will call for much higher yearly payments than the city is currently making.
Dowd stresses that the Council and the Controller are not obliged to make the presentation. He calls the move “house keeping,” “dotting the I’s and crossing the T’s” and “an effort to be respectful.”
The board and its actuaries will set a value of all the assets in the fund as of December 31st, including the new revenue stream, in the coming months and then submit it to the state for final approval. If the fund falls short of the 50% level it will be taken over by the state and the assets will be handed over to the Pennsylvania Municipal Retirement System. It is expected that the PMRS will call for much higher yearly payments than the city is currently making.
Saturday, January 1, 2011
Pension Bailout Enacted
Now it's up to the Pennsylvania Employees Retirement Commission (PERC)whether to sign off on a bailout plan approved by Pittsburgh Council Friday in an attempt to avert a state takeover of the city pension fund. State officials said they would take over control of the pension fund unless it was at least at 50% of its $990 million obligation to retirees and current workers. Prior to passage of this legislation, the value stood at 29.3%. Council beat the deadline of the threatened takeover by several hours by approving a plan to invest an additional $45 million toward the fund and dedicate nearly $736 million over 31 years from parking revenues.
Mayor Luke Ravenstahl, who preferred his own plan to lease parking assets for 50 years but definitely wanted to avert a state takeover, quickly vetoed Council's plan. Council within the hour then overrode the veto shortly before 4 p.m. thereby enacting the bailout measure.
Councilman Bill Peduto called it the best plan of all the proposals that have been put forward.....
"There was no way to not have to put money in there. We were being told we have to get to 50%. So, we tried to find the least impact way of doing that. We also provided the funding for that which is the parking rate increases."
PERC will now examine the bailout plan but might not approve it for several months.
Mayor Luke Ravenstahl, who preferred his own plan to lease parking assets for 50 years but definitely wanted to avert a state takeover, quickly vetoed Council's plan. Council within the hour then overrode the veto shortly before 4 p.m. thereby enacting the bailout measure.
Councilman Bill Peduto called it the best plan of all the proposals that have been put forward.....
"There was no way to not have to put money in there. We were being told we have to get to 50%. So, we tried to find the least impact way of doing that. We also provided the funding for that which is the parking rate increases."
PERC will now examine the bailout plan but might not approve it for several months.
Friday, December 31, 2010
New Pension Plan Ok'd By Council
In meetings on Friday, Pittsburgh City Council have preliminary and final approval to a pension bailout that they hope will avoid a state takeover of the city's pension plan. Their deadline for it to become official is midnight on December 31st. After the mayor vetoes the plan, City Council will meet to override the veto and it will become official.
Bill Peduto says this is the best plan of all of the plans that have been proposed. "There is no way to not put money in when we're being told that we have to get to fifty percent so we tried to find the least impact way of doing that. We have also provided the funding for that which is the parking rate increases," he said.
The Intergovernmental Cooperation Authority approved amendments to the city's 2011 budget and five-year spending plan that would allow parking tax money to be diverted to the pension bailout plan on Friday morning. $45 million from a trust fund was placed in the city's pension fund.
Council plans to put $735.7 million in parking tax revenue into the fund over 31 years.
Bill Peduto says this is the best plan of all of the plans that have been proposed. "There is no way to not put money in when we're being told that we have to get to fifty percent so we tried to find the least impact way of doing that. We have also provided the funding for that which is the parking rate increases," he said.
The Intergovernmental Cooperation Authority approved amendments to the city's 2011 budget and five-year spending plan that would allow parking tax money to be diverted to the pension bailout plan on Friday morning. $45 million from a trust fund was placed in the city's pension fund.
Council plans to put $735.7 million in parking tax revenue into the fund over 31 years.
Thursday, December 30, 2010
Pension Drama Drawn Out to the Last Second
On Thursday, City Council has revised the very pension they proposed on Wednesday after a veto from the mayor but still before the December 31st at midnight deadline to come up with a way to keep the city's pension from a state takeover. The city's actuaries uncovered a mathematical error with the pension bailout proposed on Wednesday so additional funds will be placed in with a plan in taking out additional debt in 2018.
Council Member Bill Peduto said this latest plan is the best of all of them and should have been initially proposed but council was given incomplete information by the state as to how they should have gone about proving they had the necessary 50 percent of the pension fund secured.
"The plan that is being pushed today has the least negative impact. There's a negative impact with all of them this one has the least negative impact with the amount of money that is being used out the budget. In other words, it has the least amount of taxpayer money involved with it," he said.
City Council will meet at 1pm on Friday to vote on the new plan. They will send it over to the mayor's office at which point he will be able to veto it again. City Council will then meet again at 11pm where they will override the mayor's veto.
Council Member Bill Peduto said this latest plan is the best of all of them and should have been initially proposed but council was given incomplete information by the state as to how they should have gone about proving they had the necessary 50 percent of the pension fund secured.
"The plan that is being pushed today has the least negative impact. There's a negative impact with all of them this one has the least negative impact with the amount of money that is being used out the budget. In other words, it has the least amount of taxpayer money involved with it," he said.
City Council will meet at 1pm on Friday to vote on the new plan. They will send it over to the mayor's office at which point he will be able to veto it again. City Council will then meet again at 11pm where they will override the mayor's veto.
Pgh Council's Pension Numbers Are Off
Instead of voting to override Mayor Luke Ravenstahl's veto of a their plan to bolster the pension fund and avert a state takeover, Pittsburgh Council this afternoon went behind closed doors to try to hash out a re-worked plan. That's because the numbers in the Council plan, approved on a 7-2 vote Wednesday, are off. That's according to Councilman Ricky Burgess and Joe King, president of the Firefighters' Union.
So now, Council has to devise a new proposal, pass it and send it to the Mayor, who will likely veto it because he still favors a leasing of city parking assets, and then override the anticipated veto....all before 12:00 a.m. Friday night. That's the deadline for the threatened state takeover of the pension fund unless it is at least at 50% of its obligation.
So now, Council has to devise a new proposal, pass it and send it to the Mayor, who will likely veto it because he still favors a leasing of city parking assets, and then override the anticipated veto....all before 12:00 a.m. Friday night. That's the deadline for the threatened state takeover of the pension fund unless it is at least at 50% of its obligation.
State: City Pension Bailout Not a Done Deal
Pittsburgh Council will vote this afternoon on whether to override Mayor Luke Ravenstahl's veto of the latest plan to bolster the city's pension fund and avert a state takeover of the fund January 1. But Pennsylvania Public Employees Retirement Commission Executive Director James McAneny says the plan still needs to be approved by the state.
If the city's pension fails to cover 50% of its obligation to workers and retirees by midnight Friday, the state will take control of the fund. The fund is currently at 29.3%. Council and the mayor have sought to avoid that outcome because it will mean a rigid payment schedule for the city that could spell higher taxes and reduced services for residents. Wednesday Council voted 7-2 to "irrevocably" dedicate $414.7 million in parking tax revenues over the next 31 years...or about 14 million a year... for the pension fund." Ravenstahl quickly vetoed that measure, saying it was flawed and risky. McAneny agrees that it's risky - "There's a very good chance of over-estimating the value of a future revenue stream. One thing that I've tried to warn the city about repeatedly is that they take care they don't dedicate a revenue stream for the next 30 years and then not have it be sufficient to get to the 50% funded ratio."
He says he has neither seen, nor approved city council's latest plan, "I've never been able to make a commitment as to what the value of a future revenue stream would be." McAneny says when the clock strikes midnight Friday the city can't do anything more to try and right the pension fund and the state will begin to analyze whether council's latest plan will in fact bail out the pension. In the rush to find a solution, McAneney says it should be noted that this problem was a long time in the making, and that the city should have been putting more money into the pension all along, "that's why they're in the position they're in."
If the city's pension fails to cover 50% of its obligation to workers and retirees by midnight Friday, the state will take control of the fund. The fund is currently at 29.3%. Council and the mayor have sought to avoid that outcome because it will mean a rigid payment schedule for the city that could spell higher taxes and reduced services for residents. Wednesday Council voted 7-2 to "irrevocably" dedicate $414.7 million in parking tax revenues over the next 31 years...or about 14 million a year... for the pension fund." Ravenstahl quickly vetoed that measure, saying it was flawed and risky. McAneny agrees that it's risky - "There's a very good chance of over-estimating the value of a future revenue stream. One thing that I've tried to warn the city about repeatedly is that they take care they don't dedicate a revenue stream for the next 30 years and then not have it be sufficient to get to the 50% funded ratio."
He says he has neither seen, nor approved city council's latest plan, "I've never been able to make a commitment as to what the value of a future revenue stream would be." McAneny says when the clock strikes midnight Friday the city can't do anything more to try and right the pension fund and the state will begin to analyze whether council's latest plan will in fact bail out the pension. In the rush to find a solution, McAneney says it should be noted that this problem was a long time in the making, and that the city should have been putting more money into the pension all along, "that's why they're in the position they're in."
Mayor Vetoes Pension Bailout Bill
Pittsburgh City Council is to vote this afternoon on whether to override Mayor Luke Ravenstahl's veto of the latest plan to bolster the city's pension fund and avert a state takeover of the fund January 1.
The State Public Employees Retirement Commission is set to manage the city's pension fund unless it is at 50% of its obligation to workers and retirees. The fund is currently at 29.3%.
Council Wednesday voted 7-2 to "irrevocably" dedicate $414.7 million in parking tax revenues over the next 31 years...or about 14 million a year... for the pension fund. Council members Ricky Burgess and Theresa Kail-Smith voted "no."
Earlier Wednesday, Council gave tentative approval to dedicating the Emergency Services Tax....the $52 annual commuter tax.....for the pension fund. But officials with the Public Employees Retirement Commission questioned the legality of that set aside. That's when Council okayed using the parking tax revenues instead.
Mayor Ravenstahl quickly vetoed that measure. The mayor had 10 days to sign the bill, let it become law without his approval or veto it, but by that time the state would have taken over management of the pension fund.
In vetoing the measure, Ravenstahl said the proposal contained "numerous potentially fatal flaws." The mayor says the plan represents "value" (future tax revenues) but doesn't have the immediate cash needed to bring the fund up to the 50% level.
Commission executive director James McAneny told the Post-Gazette that he approves the concept of infusing "value" into the fund but warned Council not to cut it too close to the 50% mark.
The State Public Employees Retirement Commission is set to manage the city's pension fund unless it is at 50% of its obligation to workers and retirees. The fund is currently at 29.3%.
Council Wednesday voted 7-2 to "irrevocably" dedicate $414.7 million in parking tax revenues over the next 31 years...or about 14 million a year... for the pension fund. Council members Ricky Burgess and Theresa Kail-Smith voted "no."
Earlier Wednesday, Council gave tentative approval to dedicating the Emergency Services Tax....the $52 annual commuter tax.....for the pension fund. But officials with the Public Employees Retirement Commission questioned the legality of that set aside. That's when Council okayed using the parking tax revenues instead.
Mayor Ravenstahl quickly vetoed that measure. The mayor had 10 days to sign the bill, let it become law without his approval or veto it, but by that time the state would have taken over management of the pension fund.
In vetoing the measure, Ravenstahl said the proposal contained "numerous potentially fatal flaws." The mayor says the plan represents "value" (future tax revenues) but doesn't have the immediate cash needed to bring the fund up to the 50% level.
Commission executive director James McAneny told the Post-Gazette that he approves the concept of infusing "value" into the fund but warned Council not to cut it too close to the 50% mark.
Wednesday, December 29, 2010
Pension Drama Continues
After a lengthy meeting on Thursday that followed a year of lengthy meetings surrounding the topic, Pittsburgh City Council members voted for a pension bailout proposal that would devote the city's commuter tax to the existing fund so the city can avoid the December 31st deadline for a state takeover. The city will not be able to touch $13 million dollars they make from a commuter tax annually for the next 31 years and will have to raise that money from parking increases.
Ravenstahl said the plan was slated to fail and would only lead to higher taxes and service reductions and repeatedly stated that he would not approve it. In an effort to work along with city council, he agreed to veto the proposal so council could override it and meet the deadline. All council members voted in favor of the plan except for Ricky Burgess who abstained from voting.
"I don't want state takeover but council has put us in this position by not doing the plans that are workable. At the ninth hour without any due diligence, without any research, plans we are putting something to the wind that we don't even know will work. Its jumping off the cliff blindfolded with the hands tied behind the back. I don't like state takeover but at least I want to protect the city's resources," he said to reporters after the vote.
Ravenstahl said the plan was slated to fail and would only lead to higher taxes and service reductions and repeatedly stated that he would not approve it. In an effort to work along with city council, he agreed to veto the proposal so council could override it and meet the deadline. All council members voted in favor of the plan except for Ricky Burgess who abstained from voting.
"I don't want state takeover but council has put us in this position by not doing the plans that are workable. At the ninth hour without any due diligence, without any research, plans we are putting something to the wind that we don't even know will work. Its jumping off the cliff blindfolded with the hands tied behind the back. I don't like state takeover but at least I want to protect the city's resources," he said to reporters after the vote.
Tuesday, December 28, 2010
Council to Vote on Pension Funding Plan
Pittsburgh City Council has reached a deal that it feels will keep the City’s pension program from being taken over by the state while at the same time not issuing any new debt or leasing any city assets. The plan calls for an increase in parking rates at garages and meters and then promises that increased revenue over the next 30 years to the pension fund. City Controller Michael Lamb says he has spoken to the Executive Director of the Pennsylvania Public Employee Retirement Commission and has received approval for the plan. PERC is the body required by law to set the value of all municipal pension funds. If the PERC sets a value of the Pittsburgh Pension Plan below the 50% funded level the state will force a takeover of the pension fund, if it exceeds the 50% mark, Pittsburgh will be allowed to continue to manage its own fund.
Lamb estimates the higher rates would generate about $880 million dollars over the next 30 years and he says it should have a present-day value of more than $220 million. That is roughly the amount needed by the end of the year to bring the pension fund up to the 50% level. Controller Michael Lamb is to meet with a representative of the public employee retirement commission later today to come up with an exact value that can be added into the pension fund.
The plan needs the support of Mayor Luke Ravenstahl and the Pittsburgh Parking Authority. Mayor Ravenstahl has not yet taken a stance on the bill. Mayoral spokesperson Joanna Doven says, "The Mayor today will be meeting with legal and financial experts with the City and the Parking Authority to discuss the viability of the plan. After all facts are discovered, the Mayor will comment further."
The Mayor has appointed all of the members of the Parking Authority Board. Councilwoman Natalia Rudiak is a member of the Authority Board and says the package of bills includes a payment plan that gives the Authority enough money to do its job.
Council members stress that the rate increase that will be phased in over the next several years are much lower than the rate increases that would have been seen if the city would have leased the parking assets as had been proposed by Mayor Ravenstahl.
Councilman Bill Peduto says this is a much better deal than issuing a bond or leasing assets. “There is nobody who is making money off of it, there is no interest to be paid, this is the least expensive plan for the people of Pittsburgh,” says Peduto. The councilman estimates that the city would have had to pay $500-600 million in interest under the Council/Controller plan and would have allowed the leasing company to take $2.4 billion out of the city under the Mayor's.
Lamb estimates the higher rates would generate about $880 million dollars over the next 30 years and he says it should have a present-day value of more than $220 million. That is roughly the amount needed by the end of the year to bring the pension fund up to the 50% level. Controller Michael Lamb is to meet with a representative of the public employee retirement commission later today to come up with an exact value that can be added into the pension fund.
The plan needs the support of Mayor Luke Ravenstahl and the Pittsburgh Parking Authority. Mayor Ravenstahl has not yet taken a stance on the bill. Mayoral spokesperson Joanna Doven says, "The Mayor today will be meeting with legal and financial experts with the City and the Parking Authority to discuss the viability of the plan. After all facts are discovered, the Mayor will comment further."
The Mayor has appointed all of the members of the Parking Authority Board. Councilwoman Natalia Rudiak is a member of the Authority Board and says the package of bills includes a payment plan that gives the Authority enough money to do its job.
Council members stress that the rate increase that will be phased in over the next several years are much lower than the rate increases that would have been seen if the city would have leased the parking assets as had been proposed by Mayor Ravenstahl.
Councilman Bill Peduto says this is a much better deal than issuing a bond or leasing assets. “There is nobody who is making money off of it, there is no interest to be paid, this is the least expensive plan for the people of Pittsburgh,” says Peduto. The councilman estimates that the city would have had to pay $500-600 million in interest under the Council/Controller plan and would have allowed the leasing company to take $2.4 billion out of the city under the Mayor's.
Monday, December 20, 2010
Firefighters Get Court Delay
The Pittsburgh Firefighters Union has asked a judge to postpone a hearing on its request to stop the state from taking over the city’s pension fund. Union attorney Joshua Bloom says now that the City Council has rejected what looks like the last opportunity to fund the pension up to the 50% level by the end of the year, the union is looking to take up the issue in the new year.
Pennsylvania Act 44 requires the city to turn its pension fund over to the Pennsylvania Municipal Retirement System if it does not make a payment of approximately $220 million by year’s end. The suit asked the judge to force the city to raise taxes enough to keep the fund under local control. The union says local control is required under the union’s contact.
Bloom says the union no longer wants to take that tack. However, Bloom says the union still believes act 44 is unconstitutional as it applies to the pension fund, “Also Act 44 is unconstitutional in that they singled out the city of Pittsburgh. The city of Pittsburgh is the only municipality across the commonwealth that is required on a mandatory basis to turn their pensions over to the state and there was absolutely no reasonable basis to single out our city.”
Bloom says the hope is that the city can find a way to avoid the take over some time in 2011. “We are asking the mayor and City Council to save our city,” says Bloom, “and what I mean by that is if the pensions are not adequately funded by the end of the year and the state takes over the pensions the payment schedule that will be mandated by the state will cause looming bankruptcy and we believe this city will suffer the same fate as Detroit.”
Pennsylvania Act 44 requires the city to turn its pension fund over to the Pennsylvania Municipal Retirement System if it does not make a payment of approximately $220 million by year’s end. The suit asked the judge to force the city to raise taxes enough to keep the fund under local control. The union says local control is required under the union’s contact.
Bloom says the union no longer wants to take that tack. However, Bloom says the union still believes act 44 is unconstitutional as it applies to the pension fund, “Also Act 44 is unconstitutional in that they singled out the city of Pittsburgh. The city of Pittsburgh is the only municipality across the commonwealth that is required on a mandatory basis to turn their pensions over to the state and there was absolutely no reasonable basis to single out our city.”
Bloom says the hope is that the city can find a way to avoid the take over some time in 2011. “We are asking the mayor and City Council to save our city,” says Bloom, “and what I mean by that is if the pensions are not adequately funded by the end of the year and the state takes over the pensions the payment schedule that will be mandated by the state will cause looming bankruptcy and we believe this city will suffer the same fate as Detroit.”
Wednesday, December 15, 2010
Pension/Parking Plan Dies Again
Pittsburgh City Council has once again rejected a plan to lease parking assets to LAZ Parking. Councilman Ricky Burges gathered only two yes votes for his compromise plan at a meeting Wednesday.
Mayor Luke Ravenstahl had hoped to lease the garages and meters for 50 years and then use the upfront proceeds to bring the city’s pension plan up to the 50% funded level in order to avoid a state takeover. Council members rejected the deal and then moved a proposal to do a garage swap and bond issuance with the Parking Authority to shore up the pension fund. Still others on the council think a state take over may be the best option.
The Burgess plan shortened the length of the lease from 50 to 40 years, lowered the fee increase schedule for parking meters in neighborhoods, included revenue sharing and allowed the city to benefit from advertising on and in the garages. He feels his plan addressed all of the concerns voiced by the community and by council members. He says he is willing to work up to the last minute to find a solution. Councilwoman Theresa Smith says council should not leave the building until it finds a way to fix the pension problem.
Councilman Bruce Kraus says any lease deal will continue to fail to get five votes because there are at least five council members who will not allow the city to sell or lease any public assets. “So if we are truly interested in resolving our pension issue… Stop it. Nobody wants it. Can we stop it now and start doing what we need to do to resolve our pension problem,” says Kraus. Councilman Bill Peduto says he will not give up control of one of the few revenue streams available to the city he likened it to “selling the cow rather than the milk.” He says cities across the nation are finding “wall street firms” swooping in to pickup assets. “Do you think they are doing this to help cities pension plans and to help cities get through tough budget times? Then you think that check cashing places are out there to help poor people,” says Peduto
The revised lease fell on a 5-2 vote with two abstentions. LAZ Parking CEO Alan Lazowski says he is not ready to walk away from the deal and promised to meet with any council member to get a deal done before the end of the year. “We have spent millions of dollars in pursuit of this deal, we have thousands of man hours in this deal,” says Lazowski, “We owe it to our company, to our 6,000 employees, we owe it to the infrastructure world that is looking at this deal to say this is important for cities across the country.”
Lazowski says he feels his firm has been very responsive to every suggestion made by council members and he reminds them that he was only responding to a Request For Proposal from the Mayor’s office when he first tried to lease the parking assets.
Council members Smith, Dowd and Burgess says they will work to find a way to prevent a state take over of the pension plan but all three know time is running out to meet the December 31st deadline.
Mayor Luke Ravenstahl had hoped to lease the garages and meters for 50 years and then use the upfront proceeds to bring the city’s pension plan up to the 50% funded level in order to avoid a state takeover. Council members rejected the deal and then moved a proposal to do a garage swap and bond issuance with the Parking Authority to shore up the pension fund. Still others on the council think a state take over may be the best option.
The Burgess plan shortened the length of the lease from 50 to 40 years, lowered the fee increase schedule for parking meters in neighborhoods, included revenue sharing and allowed the city to benefit from advertising on and in the garages. He feels his plan addressed all of the concerns voiced by the community and by council members. He says he is willing to work up to the last minute to find a solution. Councilwoman Theresa Smith says council should not leave the building until it finds a way to fix the pension problem.
Councilman Bruce Kraus says any lease deal will continue to fail to get five votes because there are at least five council members who will not allow the city to sell or lease any public assets. “So if we are truly interested in resolving our pension issue… Stop it. Nobody wants it. Can we stop it now and start doing what we need to do to resolve our pension problem,” says Kraus. Councilman Bill Peduto says he will not give up control of one of the few revenue streams available to the city he likened it to “selling the cow rather than the milk.” He says cities across the nation are finding “wall street firms” swooping in to pickup assets. “Do you think they are doing this to help cities pension plans and to help cities get through tough budget times? Then you think that check cashing places are out there to help poor people,” says Peduto
The revised lease fell on a 5-2 vote with two abstentions. LAZ Parking CEO Alan Lazowski says he is not ready to walk away from the deal and promised to meet with any council member to get a deal done before the end of the year. “We have spent millions of dollars in pursuit of this deal, we have thousands of man hours in this deal,” says Lazowski, “We owe it to our company, to our 6,000 employees, we owe it to the infrastructure world that is looking at this deal to say this is important for cities across the country.”
Lazowski says he feels his firm has been very responsive to every suggestion made by council members and he reminds them that he was only responding to a Request For Proposal from the Mayor’s office when he first tried to lease the parking assets.
Council members Smith, Dowd and Burgess says they will work to find a way to prevent a state take over of the pension plan but all three know time is running out to meet the December 31st deadline.
Wednesday, December 1, 2010
Councilmember says Third Draft of City Budget not Quite Right
Pittsburgh Mayor Luke Ravenstahl has submitted the third draft of the city's 2011 budget and five year spending plan. The first time his plan was rejected by the Intergovernmental Cooperation Authority because it included funds from leasing the city's parking assets, which was rejected by city council. The second draft was sent back because it included funds that had not been accounted for as well as insufficient contributions to the pension fund as stipulated under Act 47. The most recent version outlines a $451 million plan, with $50 million set aside for the pension fund. The city's pension only holds 27.5% of its total liabilities and it needs to reach the 50% funded mark by the end of the month to avoid state takeover. Councilman Patrick Dowd says he's not satisfied with the latest draft of the budget, in part because it doesn't do enough to bolster the the pension. "We can pay $70 (million), we can pay $80, we can pay $90...we want to make sure we're paying more into the pension fund than just our minimum." And Dowd says he's frustrated with the lack of progress in talks about fixing the city's looming pension crisis. In October city council rejected the mayor's plan to lease the city's parking garages and meters to LAZ Parking for 50 years for an upfront payment to the pension fund. In turn Ravenstahl nixed council's plan to sell the city's parking assets to the Parking Authority for a pension payment. Dowd says they've tried to meet the mayor half way."We worked on a compromise on the lease plan, really making the LAZ offer meet the council-controller plan and he's rejected that. How many times can we offer the executive branch a solution–if it's not the solution they've offered, it's not going to work–it's very frustrating at this point." Without a big payment, the Pennsylvania Municipal Retirement System will take over the city's pension next year and implement a strictly regimented payment schedule that could force the city to cut services and raise taxes.
Tuesday, November 23, 2010
New Pension Numbers Arrive
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.
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.
Monday, November 22, 2010
2 Votes Moves Bond Plan Forward
On a 2-0 vote with 6 abstentions, Pittsburgh City Council has given tentative approval to a plan to use reserve funds to pay down higher rate debt and then float new lower rate bonds. The proposal from the Ravenstahl administration uses $45 million set aside by the council to pay down debt or add to the pension fund, to pay holders of a non-callable bonds through a tender offer. The administration would then issues a similar amount of debt through a federal program at a much lower rate. The current rate is more than 8% and the new rate is expected to come in at less than 3%. The council balked at the deal because the proceeds from the new bond can only be used for capital projects. Some members of council were eyeing that money to help shore up the pension fund this year.
Councilman Bill Peduto says he sees the value in the swap and at any other time he would probably approve it but not right now. “We may need that money to put upfront for our pension fund to lower our obligation,” says Peduto. “What we want to find out in the next week is what makes that money more valuable, using it as an upfront payment into the pension or restructuring debt.”
But the administration’s budget director Scott Kunka says the proposal cannot wait. He says if the bonds are not sold next week the federal program allowing for the low interest rates will expire and some of the tender offers may come off the table.
Peduto and other members of council feel they will have a better understanding of how to best use the money tomorrow. The Secretary of The Pennsylvania Municipal Retirement System (PMRS) is expected to report back to council and the Mayor’s office Tuesday with new calculation on the city’s minimum yearly payment for the next 30 years, if there is a one time upfront infusion of cash into the pension fund. Peduto asked for a calculation based on an additional $107 million. That would include the approximately $45 million in reserves, some $50 million already in the pension fund in high risk investments that the PMRS did not use in previous calculations and another $10 million the mayor has projected as surplus in 2011. Peduto says that will shurely lower the rates compared to the numbers present a few weeks ago that show average payments of $120 million a year with spikes of more than $160 million a year.
Peduto also asked to see what would happen if $220 million were also added to the fund some time before 2015. 2015 is when the actual take over of the pension fund would occur. $220 million is based on the Council/Controller plan to sell some parking assets to the Parking Authority, which would in turn float that much in bonds. The Mayor has rejected such a plan but Peduto says there is time to change that. “There is a mayor’s race in 2013 and if the mayor wants to dig his heals in and say, ‘no I won’t do it,’ then he is going to have to come up with a new plan… and if he is not willing I’m certain there will be a lot of other people who would decide to run who will.”
Councilman Ricky burgess and Councilwoman Theresa Smith gave the yes votes. The measure will now be up for a final vote Tuesday of next week.
Councilman Bill Peduto says he sees the value in the swap and at any other time he would probably approve it but not right now. “We may need that money to put upfront for our pension fund to lower our obligation,” says Peduto. “What we want to find out in the next week is what makes that money more valuable, using it as an upfront payment into the pension or restructuring debt.”
But the administration’s budget director Scott Kunka says the proposal cannot wait. He says if the bonds are not sold next week the federal program allowing for the low interest rates will expire and some of the tender offers may come off the table.
Peduto and other members of council feel they will have a better understanding of how to best use the money tomorrow. The Secretary of The Pennsylvania Municipal Retirement System (PMRS) is expected to report back to council and the Mayor’s office Tuesday with new calculation on the city’s minimum yearly payment for the next 30 years, if there is a one time upfront infusion of cash into the pension fund. Peduto asked for a calculation based on an additional $107 million. That would include the approximately $45 million in reserves, some $50 million already in the pension fund in high risk investments that the PMRS did not use in previous calculations and another $10 million the mayor has projected as surplus in 2011. Peduto says that will shurely lower the rates compared to the numbers present a few weeks ago that show average payments of $120 million a year with spikes of more than $160 million a year.
Peduto also asked to see what would happen if $220 million were also added to the fund some time before 2015. 2015 is when the actual take over of the pension fund would occur. $220 million is based on the Council/Controller plan to sell some parking assets to the Parking Authority, which would in turn float that much in bonds. The Mayor has rejected such a plan but Peduto says there is time to change that. “There is a mayor’s race in 2013 and if the mayor wants to dig his heals in and say, ‘no I won’t do it,’ then he is going to have to come up with a new plan… and if he is not willing I’m certain there will be a lot of other people who would decide to run who will.”
Councilman Ricky burgess and Councilwoman Theresa Smith gave the yes votes. The measure will now be up for a final vote Tuesday of next week.
Tuesday, November 16, 2010
PA House Okays Pension Overhaul
The Pennsylvania House has wrapped up its two-year legislative session.
The chamber passed a pension reform bill and a measure expanding the right to deadly self defense in its final votes.
165 lawmakers voted for the pension overhaul, despite concerns from top Republicans and Democrats the measure violates the state Constitution by addressing two issues at once because it included a provision for a fiscal oversight office.
Democrat Dwight Evans of Philadelphia, the House Appropriations Chairman, argued the pension bill was unconstitutional because of the fiscal office provision....
"Why take the chance, Mr. Speaker? Why take the chance and put it in the hands of the courts? In my view, just one person, why take that gamble?"
Some Republicans said they wanted to wait until next year to pass a broader reform, but Cumberland County representative Glenn Grell argued for immediate action.
"Every new legislator who joins us in December, and every new state employee who comes to join the Corbett Administration, will be grandfathered into the current expensive system, and we will be even further behind in bringing these pension funds to a more stable financial status."
The measure increases the retirement age and vesting period for future public employees. It also decreases retirement benefits, and increases the amount of money an employee pays into his or her pension fund.
Governor Rendell said will sign the pension overhaul legislation.
The House also overrode Rendell’s veto of an education bill. A Senate Republican spokesman says Senate leaders will “discuss the possibility” of coming back to vote on the measure.
The chamber passed a pension reform bill and a measure expanding the right to deadly self defense in its final votes.
165 lawmakers voted for the pension overhaul, despite concerns from top Republicans and Democrats the measure violates the state Constitution by addressing two issues at once because it included a provision for a fiscal oversight office.
Democrat Dwight Evans of Philadelphia, the House Appropriations Chairman, argued the pension bill was unconstitutional because of the fiscal office provision....
"Why take the chance, Mr. Speaker? Why take the chance and put it in the hands of the courts? In my view, just one person, why take that gamble?"
Some Republicans said they wanted to wait until next year to pass a broader reform, but Cumberland County representative Glenn Grell argued for immediate action.
"Every new legislator who joins us in December, and every new state employee who comes to join the Corbett Administration, will be grandfathered into the current expensive system, and we will be even further behind in bringing these pension funds to a more stable financial status."
The measure increases the retirement age and vesting period for future public employees. It also decreases retirement benefits, and increases the amount of money an employee pays into his or her pension fund.
Governor Rendell said will sign the pension overhaul legislation.
The House also overrode Rendell’s veto of an education bill. A Senate Republican spokesman says Senate leaders will “discuss the possibility” of coming back to vote on the measure.
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