HARRISBURG, Pa. (WHTM) – Auditor General Eugene DePasquale is touting two of Harrisburg’s three municipal pension funds as a financial success, and he says the capital city could offer a blueprint for state pension reform.
A few years ago, Harrisburg Fire Union representatives said firefighters took unprecedented concessions when hashing out a new deal with a state-appointed receiver. DePasquale said a recent audit showed the sacrifice paid off.
“The lesson is when you do these types of things, you can get to a better path of financial stability,” he said.
The audit showed that Harrisburg’s fire union (IAFF Local 428) has a pension plan that is 115.8 percent funded. The pension fund of the city’s non-uniformed employees’ union (AFSCME Local 521) is 135.8 percent funded, tops in the state among third-class cities.
DePasquale said the two funds are better than 562 other municipal pension funds in the state that remain distressed.
He credits the financial success to union concessions and a conservative approach since the 1980’s by having the Pennsylvania Municipal Retirement System manage investments.
“There’s no magic wand in all this,” said DePasquale, “but our audit showed that’s exactly what happened.”
Depasquale pointed out that the city’s police pension fund, not managed by the state, continues to have shortfalls. City Council last year voted to triple the Local Services Tax to help cover a $2 million shortfall for increased police pension costs.
The auditor general said Harrisburg’s police pension fund has increased 636 percent since 2009. This problem persists despite dumping at least $5 million into the fund during that time.
In 1995, Harrisburg approved a $35 million bond to funnel into its municipal pension funds. DePasquale said that helped bring down costs in some ways, but he conceded the borrowing has been cause for alarm.
“People of Harrisburg are well aware of what’s happened over the last 5, 6, 7 years,” he said. “The amount of borrowing that was done has left them with significant legacy costs moving forward.”
Pennsylvania’s municipal pensions are unfunded by $7.7 billion. Harrisburg’s long-term success with PMRS and union concessions could offer a compass for pension reform for state lawmakers.
“This hopefully provides a good road map to the General Assembly and the governor for at least some of the things that can be done to improve the situation,” he said.