Wednesday, November 5, 2014
At a press conference timed to follow last night's election, Auditor General Eugene DePasquale and Mayor Bill Peduto today announced the launch of an audit of the city's pension plans for firefighters, police and other municipal employees.
While the pension audit is one done regularly by the auditor general's office, DePasquale and Peduto used the opportunity to talk about the city's dire pension outlook and call on newly elected representatives to help solve the state-wide crisis.
"People want to have safe streets, enough cops to protect your streets, communities that are safe from fire because you have enough firefighters," said DePasquale. "The only way cities are going to be able to afford that is to get their pension costs under control and there's going to have to be help from Harrisburg."
Of the 1,218 municipalities throughout the state, 573, including Pittsburgh, are distressed and underfunded. Pittsburgh was ranked number two on a list of the top 25 municipalities with the largest unfunded pension liabilities.
"What we've seen is a loss within the asset, some of it due to market condition, some of it due to a lack of adequate investment," said Peduto. "Bringing about a systematic change in our pension system is absolutely required not just for Pittsburgh but for every other older city throughout the state of Pennsylvania."
According to the auditor general's office, Pittsburgh has an underfunded pension liability of $485 million. Throughout the state, the pension liability totals $6.7 billion.
In addition to illustrating the state's pension problem, DePasquale also detailed a number of possible solutions. These include establishing consistent member contributions, updates that account for the population's increased life expectancy, and excluding overtime and lump-sum leave payments from pension benefits.
"This is about protecting people's retirements. These changes have to occur," Peduto says. "At the end of the day if we go bankrupt there's no money to give anyone, not only the employees of today but the employees of the future."