What About Inadequately Funded Municipal and Local Public Pensions?
We have written many posts about underfunded benefit programs at the federal and state levels (see e.g., here), but another looming problem is underfunding of pension programs at the local levels. The potentially affected employees include firefighters and sanitation workers and police officers.
This week WITF-Radio’s Smart Talk program explored the issue in Pennsylvania:
“More than 500 Pennsylvania municipalities’ pension funds are considered “distressed” because they’re funded at less than 90%. Some Pennsylvania cities, boroughs, and townships currently have pension funds at lower than 50%. State law impacts public employees’ ability to negotiate their contracts, making this issue of particular concern to lawmakers in Harrisburg.
Last week, Pennsylvania Auditor General Eugene DePasquale announced that in total Pennsylvania’s municipal pension funds have a $7.7 billion liability. Legislation is expected to be proposed this year that will seek to eliminate some of the liability over the long term.”
It seems unlikely that Pennsylvania is the only state with a local-level pension funding problem.
The primary speaker on the program, Pennsylvania Municipal League Executive Director Richard Schuettler, pointed to an interesting aspect of the problem, what he sees as unrealistic decisions by arbitrators in collective bargaining labor disputes over pay and retirement benefits.