Auditor General praises York City's pension progress
York City's pension-financing situation has begun to improve, making it the only small city in Pennsylvania where that's the case, according to Auditor General Eugene DePasquale.
DePasquale, a former York City economic development director and then Democratic state representative, gave an upbeat news conference Monday afternoon in York City Hall council chambers along with York City Mayor Kim Bracey and a phalanx of other local officials, lauding the city and local public-safety unions for the progress they've made.
"This is the first audit of a third-class city where I've seen marked improvement," said DePasquale, who spoke flanked by Bracey, York City Police Chief Wes Kahley, Fire Chief David Michaels, local fire union president Fred De Santis, local Fraternal Order of Police president Jeremy Mayer, state Rep. Seth Grove, R-Dover Township, and Bruce Veseth, a former city police captain who's the president of the association of retired York City police officers.
According to the auditor general's office, the city's pension obligations are funded at 65.5 percent as of the start of 2015, up from 58.5 percent at the start of 2013; that includes the police and firefighters pension funds as well as the fund for all other municipal employees. The state considers any pension funds financed at 89 percent or below to be distressed; pensions financed between 70 and 89 percent are only "minimally" distressed, while any between 50 and 69 percent financed are "moderately" distressed, and any at less than 50 percent are "severely" distressed.
This news conference focused in large part on the city police's pension plan, which was financed at 69.9 percent as of the start of 2015, according to DePasquale's office. That's up from 61.9 percent at the start of 2013 and 54.9 percent at the start of 2011, according to the report. That's significant progress, DePasquale said: After all, that means the plan went from just five points above "severe" distress to nearly cross the threshold into "minimal" distress.
A big part of that comes from the fact that the liability — how much the pension fund comprises in total — has dropped thanks to givebacks by the local police union, the White Rose FOP lodge. The union agreed in December 2014 to raise the retirement age from 50 to 55 and to fix the annual cost-of-living adjustments at 2.5 percent. Those changes save the city $5 million, he said.
Those concessions from the FOP came after Bracey announced in 2014 that it appeared the city was going to have to cut 46 police officers and eight firefighters to balance the budget. York City was ultimately able to keep all of those positions, though some of the firefighting jobs were temporarily lost.
"It would have crippled public safety in the city," DePasquale said on Monday. He lauded both the police and the firefighters unions for their willingness to make concessions "for the dangerous work that they do."
Also in 2015, the city began levying an extra 0.25 percent income tax earmarked for the pension funds.
Both DeSantis and Mayer, the local union heads, said they were pleased with how the agreements ended up.
"It was a great team effort," Mayer said. "We're very happy because no one got laid off."
Both Mayer and DeSantis noted that neither the York City police officers nor the city's firefighters receive Social Security, so their pensions are all they receive after they retire.
"That's why we fight so hard to keep what we got," DeSantis said.
DeSantis, who a couple of months ago expressed anger and frustration with Bracey's administration, said he feels that the city government is treating the firefighters union — the York Professional Fire Fighters Association Local No. 627 of the International Association of Firefighters — better than it had.
But though the auditor general and mayor struck an almost exclusively positive tone in the news conference, the report was in parts less merry, noting in bold font, "We continue to be concerned about the funded status of the police and firefighters pensions." The firefighters fund in January 2015 was financed at 52.3 percent, down from 58.2 percent two years before that and 60.3 percent in 2011.
DePasquale and other officials said that the concessions the firefighters' union union agreed to this year haven't yet been reflected in the numbers, so the next compliance audit in two years will reflect that. The fire union's concessions, which were very similar to the FOP's, will likely save a couple million dollars, according to Michael Doweary, York City's business administrator. The firefighters fund is significantly smaller than the police officers, as the force is smaller; there are just under 60 paid firefighters, while there are around 100 cops. The pension fund for all other city employees is smaller still and funded at 77.8 percent, according to the auditor general's office.
But, Doweary said, an arbitration award to the fire department will cancel those gains out, likely netting a loss. The city had been contending it didn't have to give firefighters hired after 1988 cost-of-living increases on their pensions, but an arbitrator in January disagreed. By councilman Henry Nixon's calculations, the award made the city's obligations rise by $7 million, and York City will need to pay $1.4 million more in 2017 and then an additional $500,000 each year after.
Nixon, who attended the news conference, later told The York Dispatch he thought the fire union should not have sought the increases, as they had been bargained out of the contract more than 20 years earlier.
Nixon praised Bracey's administration for its work on the pension issues.
"I think for the foreseeable future we’re on a good path," he said. "All of this is highly positive."
The unions will need to give more concessions, though, to get all the way there, Nixon said.
"One of the things that we really ought to be looking at is collaboration with neighboring communities," he said. Nixon shied away from the word "regionalization" of police and fire departments, but he acknowledged that was more or less what he meant. He said that he believes that within his lifetime there'll be countywide police and fire services here.
"This is an antiquated system," he said of the fact that York County has 72 municipalities, many very small, and many want to have their own services. "It’s just not relevant today."