Most municipalities are in good shape
November 14, 2012
Pension plans of municipalities in Butler County are in good financial health, according to a recent analysis by the state’s Public Employee Retirement Commission. The report covered more than 3,000 municipal pension plans across the state. The commission releases its findings annually and assigns designations that reflect the viability of each municipality’s plan. Those plans are rated on a scale from 0 to 3, with 0 being “not distressed” and 3 being “severely distressed.” The commission only tallied reports for 16 municipalities in the county, with most being designated as not distressed or minimally distressed. The worst score in the county went to Lancaster Township, which received a moderately distressed rating of 2. According to the agency’s website, the retirement commission contacted 4,600 municipal governments to determine the status of their pension plans. Based on those contacts, 3,000 reports were reviewed by the commission. Also according to the website, the commission only reviewed defined benefit pension plans and not defined contribution plans. Cranberry Township manager Jerry Andree said the report offers a “good indicator of a plan’s health,” and added that Cranberry has a designation of “minimally distressed.” Andree said many municipalities across the state are struggling more than normal because of the poor economy. Many municipalities’ pension plans took a hit several years ago when the stock market crumbled, something Andree called a “double-whammy.” “A lot of plans are struggling because of the bad market that came four or five years ago,” he said. “Each year we’re supposed to do a minimal municipal obligation of what we’re supposed to contribute. Probably a lot of communities never did that and they kept getting behind and behind.” The township manager also questioned why the state foists “unfunded mandates” on municipalities by requiring that each pay its police 50 percent of their final three years’ average pay for their pension. “The state has one foot in the door by telling communities what they have to pay, and saying we have to fund it,” he said. “I see the state shaking its finger and criticizing plans, when the reality is that every plan for state employees would be considered severely distressed.” Zelienople manager Don Pepe said he’s pleased with the minimally distressed designation given to the borough, adding that not many across the state got a not distressed rating. “If your plan is not distressed, it means you have more money in the plan than is needed, that there’s an excess,” he said. “That’s probably not the case for most people. That would mean the pension plan is really overfunded.” Pepe also said the designation of minimally distressed is “nothing to be concerned about” and plans that are designated as not distressed are “few and far between.” Seven Fields manager Tom Smith said his municipality received a “not distressed” designation. While he’s happy about the health of Seven Fields’ pension plan, Smith cautioned not to put too much stock in the report, if only because municipalities have little oversight in their pension plans. “To me it isn’t that we’re knowingly throwing more dollars into our retirement fund that we need,” he said. “We’re going on what our actuary tells us on what our minimal municipal obligation is. There’s not much oversight. The actuary tells you what to pay and you pay it.” Lancaster Township officials couldn’t be reached for comment.