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DePasquale promotes pension reform during visit to York
Eugene DePasquale, the state auditor general who formerly represented York City in the state House, believes two tasks need to be completed to keep Pennsylvania's economy growing: improve the urban educational system and fix the municipal pension crisis.
Speaking at the York County Economic Alliance's monthly club breakfast on Wednesday, DePasquale laid out the highlights of his task force's report to improve pension systems, including consolidating oversight of each municipality's plan to the Pennsylvania Municipal Retirement Fund and moving to a more conservative expected rate of return.
"We need to take this issue seriously," he said to the room full of business leaders at the Yorktowne Hotel. "My task to you is to call your state senator and urge them to reform these plans by Christmastime."
DePasquale, who was appointed to head up the task force in May by Gov. Tom Wolf, said that early in his term as state auditor general he kept receiving reports of underfunded municipal pension programs and eventually calculated the total municipal pension liability to be just under $8 billion. Pennsylvania, with municipalities often having three different pensions each (police, fire, non-uniformed), has more municipal pension plans than the rest of the country combined, he said.
Locally: As a county, York has mostly healthy municipal pension plans, DePasquale said, but York City is in the top 25 of underfunded plans — and on the border of severe distress.
In 2013, its most recent report, the state auditor's office listed York City's plan as moderately distressed with $91,053,194 in assets and $155,728,842 in liabilities.
DePasquale said it's gotten worse since then.
He also mentioned that North York and West York are on the verge of dangerous distress levels.
Immediate: DePasquale used Scranton, which could be just two to four years away from being unable to make pension payments, as an example of why pension reform is an immediate concern.
He warned that, without reform, municipalities would be looking at massive property tax increases, government worker layoffs, or both. He added that bankruptcy is not a good option.
"If we don't do this, economic growth will be halted," he said. "There is movement throughout Pennsylvania right now of younger professionals back into urban areas, but that will change real quick if their taxes rise and police forces decrease."
Solution: DePasquale pointed to Harrisburg, a municipality with numerous other financial issues, as an example of why the plans should be moved to the state's municipal retirement fund. After moving to the state fund, Harrisburg has a plan that is currently more than 100 percent funded.
Rep. Seth Grove, R-Dover Township, whom DePasquale lauded for his work promoting reform, said he doesn't believe forcing municipalities into consolidation for their plans is necessary but that state oversight is a good idea.
Legislation: Grove cosponsored a bill — House Bill 316 — that would allow municipalities to freeze defined-benefit plans for current employees and shift new hires to a defined contribution plan. The bill currently sits in the House awaiting a vote, and Grove said he and other co-sponsors are working to amend the bill based on DePasquale's report, which he said is well done.
"We need to move forward (on pension reform) before it's too late," Grove said.
Rep. Kevin Schreiber, D-York City, who previously cautioned against jumping on board with the Republicans' reform bill, said he believed DePasquale's report and recommendations were "spot on," and that he would support HB 316 if it made amendments in line with those recommendations.
Schreiber said the main concern now is how to take DePasquale's recommendations and turn them into legislation that would garner support — and pass — in the immediate future.
—Reach David Weissman at email@example.com.