Auditor General Investigation of Scranton Pension Plan Shows Dire Need for Reform, Lawmakers Say
2/25/2015
HARRISBURG – Reps. Seth Grove (R-York) and Keith Greiner (R-Lancaster) today commented on the announcement that Pennsylvania Auditor General Eugene DePasquale will launch an investigation into the municipal pension plan for the city of Scranton, stating that it shows the need for statewide municipal pension reform.
 
The planned investigation would center on double pension benefits which were awarded to some members of the city’s non-uniformed union. The incentive was offered to those who retired by the end of 2002, provided that they had 25 years of service. This resulted in an increased monthly benefit and health care coverage for retirees. The Pennsylvania State Police has also launched an investigation into the matter.
 
In a report last August, DePasquale stated that based on an audit and current estimates, the city’s pension funds could run out of money in less than three to five years and could force Scranton into bankruptcy. Furthermore, the report showed that over a five-year period, the city’s pension payment obligations nearly tripled, from $3.3 million in 2008 to $9.3 million in 2013. The auditor general is also compiling an updated audit which is expected to be completed this spring.
 
“Scranton is not alone in facing this problem,” Grove said. “In fact, it is not even limited to urban areas. Another recent report from the auditor general found that more than half of the state’s municipal pension plans are in distress. Many municipalities have already responded by cutting services, furloughing employees and increasing taxes. That will continue to happen unless we act soon.”
 
The state’s municipal pension systems would be reformed under legislation soon to be introduced by Greiner. The legislation would apply to all townships and boroughs with full-time public safety personnel and all cities, except Philadelphia. After a defined date, new hires would be placed in a defined benefit plan with a balance made up of mandatory employer and employee contributions and an employer-guaranteed interest credit.

Current employees would maintain all existing rights and benefits; however, these benefits would be frozen at current levels. Each municipality would maintain two plans until there are no more beneficiaries in the old defined benefit plan. In addition, the legislation would have removed pension benefits from the collective bargaining process.

At a press conference today, the Pennsylvania Institute of Certified Public Accountants (PICPA) spoke in support of Greiner’s bill.

“Municipal pension obligations are continuing to cripple communities across Pennsylvania,” Greiner said. “This plan, which has gained support from leaders across the Commonwealth, would help to address the growing need for municipal pension reform in Pennsylvania. My hope is that Republicans and Democrats in both the House and Senate can come together to advance an affordable and sustainable solution to this problem.”

For more legislative news, go to www.RepGrove.com.

Representative Seth Grove
196th District
Representative Keith Greiner, CPA
43rd District
Pennsylvania House of Representatives

Media Contact: Nick Ruffner
717.260.6258
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