Sanko Op-Ed Corrects Misinformation About Municipal Pensions
PSATS Executive Director released a statewide op-ed on January 16 that addresses the "untold story" about municipal pensions.
Municipal Pensions: The Rest of the (Untold) Story…
Make no mistake: Pennsylvania is in the midst of a public pension crisis.
The headlines, including those generated by recent comments by Auditor General Eugene DePasquale, indicate that the predicament is deep-rooted and widespread.
But do the news reports tell the whole story?
Clearly, the commonwealth is facing a snowballing pension bill, expected to mushroom from $52 billion today to more than $65 billion by 2021, to cover retirement benefits promised to more than 800,000 state and public school employees.
It’s also true that a handful of local governments — primarily large and midsize cities like Philadelphia, Pittsburgh, and Scranton — have retirement programs that are under water and have been for quite some time.
But here’s something the headlines – and even the auditor general – haven’t told you: The majority of municipal pension plans are doing just fine and provide a stark contrast to the headline-grabbing horror stories.
In places like Bethel Township in Berks County, Castanea Township in Clinton County, Connellsville Township in Fayette County, and Great Bend Township in Susquehanna County, employee pension plans are overfunded by as much as 700 percent
These communities are the rule, not the exception, according to recent data from the Pennsylvania Employee Retirement Commission, which has been documenting the distress level of the 1,448 municipalities that receive state aid to offset mandated retirement benefits.
PERC figures indicate that the number of solvent municipal pension plans significantly exceeds the number of troubled ones. In 2014, for instance, 808 municipalities and their plans were classified as “not distressed” while just 23 local governments, including Philadelphia and Scranton, were declared “severely distressed,” which means the plans are funded at less than 50 percent of liabilities. The remaining 617 municipalities and their plans fell in between, defined as either minimally or moderately distressed.
Still, despite the small number of severely distressed municipal plans, some are portraying the pension problems of a few as a statewide epidemic and want everyone, including communities that have kept their pension plans healthy and above water, to swallow the same bad medicine.
Their solution: Consolidate all local retirement plans into a single statewide system and let the healthy one’s assets be used to balance the troubled ones. But bigger isn’t better. All we have to do is look at the state’s behemoth and woefully underfunded system, which accounts for 90 percent of the pension stress in the state, for proof of that.
So what is the answer?
First and foremost, lawmakers and others have to stop ignoring the giant elephant in the room, the state’s out-of-control pension system, and finally do something about it.
Between the retirement benefits offered through the State Employees Retirement System and the Public School Employees Retirement System, Pennsylvania has accumulated more than $52 billion in pension obligations, and that number continues to grow.
Proposed reform options have included switching employees from a defined benefit to a defined contribution plan, similar to a 401(k). This proposal won’t fix the shortfall, but it will reduce future retirement costs, a step in the right direction.
Another good step for state officials: Admit that local governments “get it” and take some lessons from them. Why not study what pension-smart municipalities are doing right? And while the state is at it, why not enact other reforms that address the root causes of fiscal distress to help municipal pension plans stay solvent?
The Pennsylvania State Association of Township Supervisors supports a proposal that would stop third-party arbitrators from including municipal police and firefighter pension benefits in contract negotiations. This practice, noticeably absent from the headlines, has significantly escalated municipal pension costs at the expense of local budgets and taxpayers.
The state’s pension crisis – and I emphasize the word “state” here – didn’t happen overnight, nor will it be solved overnight.
But let’s not get distracted, either, with misleading headlines, misguided efforts, and false alarms focused on municipal pension plans. They’re OK.
Hopefully, someday after we’ve made the tough decisions and taken some cues from the locals, we can say the same about the state’s pension plans.
DEP Offers Free MS4 Training Sessions
The Pennsylvania Department of Environmental Protection invites municipal managers, other public officials, and engineers to attend free training sessions on compliance with water pollution control requirements for municipal separate storm sewer systems (MS4).
The training sessions will be held across the state this winter. The first four sessions will provide information on the basics of MS4 permit compliance. The second four sessions will emphasize additional MS4 requirements that apply to MS4 permittees with Total Maximum Daily Load and Chesapeake Bay Pollutant Reduction Plan obligations.
MS4 Permit Compliance Sessions:
- Feb. 10 – Best Western, Central Hotel and Conference Center, 800 East Park Drive, Harrisburg
- Feb. 12 – The Woodlands Inn, 1073 Highway 315, Wilkes-Barre
- Feb. 18 – Holiday Inn, Morgantown/PA Turnpike, 6170 Morgantown Road, Morgantown
- Feb. 25 – Pittsburgh Marriott North, 100 Cranberry Woods Drive, Cranberry Township
TMDL Plan / Chesapeake Bay Pollutant Reduction Plan Sessions:
- March 17 – Holiday Inn Lansdale, 1750 Sumneytown Pike, Kulpsville
- March 19 – Inn at Leola Village, 38 Deborah Drive, Leola
- March 25 – The Woodlands Inn, 1073 Highway 315, Wilkes-Barre
- April 1 – Pittsburgh Marriott North, 100 Cranberry Woods Drive, Cranberry Township
Each session will be held from 9 a.m. to 3:30 p.m., with sign-in at 8:30 a.m. Lunch is included.
Space is limited, so registrations will be accepted on a first-come, first-served basis. Preregistration is required.
To register, contact Joyce Rivers at Century Engineering, Inc., at 717-901-7055 or MS4Workshop@centuryeng.com. Deadline for registration is two weeks before the date of the session.
Sign Up for COSTARS Salt Contract By March 15
Townships should be sure to sign up for next winter’s COSTARS road salt contract by March 15. This program has helped more than a thousand municipalities cut their costs and guarantee adequate supplies.
Participate by completing the program’s 2015-2016 Salt Participation Agreement, which is posted on the COSTARS members page. Under the contract, the state Department of General Services will secure more than 1 million tons of salt this year for the state Department of Transportation and local governments.
[Note: While only registered members may participate in the commonwealth’s salt contract, it takes just minutes for townships to sign up for COSTARS, the state’s cooperative purchasing program. To learn more, go to the COSTARS website or call toll-free (866) 768-7827.]
Participation continues to grow
Last year’s salt contract had a record 1,584 COSTARS members sign agreements for 828,857 tons of salt. That represents an increase of 57 members over the previous year and a 16 percent increase in salt tonnage.
The collective buying power of COSTARS has produced lower costs for participants. The practice of bidding in the spring, plus the large tonnage, has resulted in Pennsylvania’s ability to maintain lower salt prices than in neighboring states.
However, after one of the longest, iciest, and snowiest winters the year before, the price of road salt increased an average of 9 percent last year. Eight counties saw an increase of less than 5 percent, while 15 counties saw an increase of more than 12 percent for the 2014-2015 season.
Contracts are flexible
To participate in next season’s salt contract, townships must fill out a simple one-page document that can be completed and submitted electronically.
Although legally binding, the contract has built-in flexibility. For example, participants are obligated to purchase only 60 percent of their stated needs but may buy up to 140 percent at the contracted price. Townships may use liquid fuels funds to purchase the materials.
DGS goes to bid in the spring and awards the salt contracts, by county, in July. The contract is posted on the COSTARS website in early August.
COSTARS members may realize additional savings, too, by piggybacking on more than 250 other state contracts for such commodities and services as tires, computers, gasoline, aggregates, vehicles, power equipment, office supplies, food, and equipment maintenance. Townships should note that the road salt contract is the only COSTARS agreement that requires an advance commitment.
Apply for Traffic Signal Grants By Feb. 27
The Pennsylvania Department of Transportation is accepting applications for the second round of Green Light-Go funding. Appications are due by February 27.
During the fiscal year that begins July 1, 2015, up to $25 million will be allocated to municipalities for installing light-emitting diode (LED) technology, performing regional operations such as retiming, developing special event plans, and monitoring traffic signals, as well as upgrading traffic signals to the latest technologies.
Under the Green Light-Go program, projects on corridors with fewer than 10,000 vehicles per day will be managed by the municipality. PennDOT will manage any project with signals on corridors that have greater than 10,000 vehicles per day. Both types of projects will require a 50 percent match from the municipality.
Green Light-Go funding was made possible by Act 89, the far-reaching transportation plan that Gov. Tom Corbett signed in November 2013.
IRS Increases Mileage Rate to 57.5 Cents Per Mile
The internal Revenue Service recently announced that the current standard business mileage rate will increase to 57.5 cents per mile effective January 1, 2015.
Township supervisors may implement this change by motion at a public meeting.
Survey of Financial Condition Submission Deadline Moved up to Feb. 11th!
The Pennsylvania Department of Community and Economic Development has announced that the 2014 Survey of Financial Condition form must be submitted by February 11, 2015, for municipalities to receive their state liquid fuels payments by March 1.
This is contrary to the initial information that DCED sent to all municipalities. That communication indicated that the 2013 report would be used to qualify for 2015 payments and that the deadline for the 2014 report would remain March 15.
Townships with questions concerning this form should contact the Governor’s Center for Local Government Services toll-free at (888) 223-6837.
Enter PennDOT's 2015 Build a Better Mousetrap Competition
Have you or one of your coworkers recently built an innovative gadget or developed a better way to do a road-related job? If so, now is the time to show off a project your municipality is proud of in the Build a Better Mousetrap Competition.
PennDOT is looking for projects that you, your employees, or crew designed and built. That can include the development of tools, equipment modifications, and/or processes that increase safety, reduce cost, improve efficiency, and improve the quality of transportation.
If you have something you think would qualify for this competition, submit your entry by Friday, March 6, 2015.
Entries will be judged by a committee of municipal road employees on:
- savings/benefits to the community;
- transferability to others; and
The winning entry will be submitted to a regional and national competition to compete for recognition and, of course, bragging rights. Winners of the national competition will be announced at the annual LTAP/TTAP national conference this summer. All entries at the national level will be posted on the LTAP/TTAP program website and compiled into an electronic booklet.
See this brochure for more information, including the 2014 winning entries and runners-up.(Congratulations to 2014 winner Upper Nazareth Township in Northampton County and to runners-up Lafayette Township in McKean County and Bushkill Township in Northampton County.)
If you have questions, please email firstname.lastname@example.org or call her at (717) 763-0930, ext. 156.