DePasquale: Harrisburg is a model for fixing underfunded pensions

(Harrisburg) — The state Auditor General says one solution to underfunded municipal pensions in Pennsylvania could come from the city of Harrisburg. 

Some 562 underfunded municipal pension plans exist across the state.

Auditor General Eugene DePasquale says the vast majority of them have come before the turmoil on the stock market, the last few months.

He says too many municipalities have overestimated the expected rate of return on their pension investments.

“Cities were allowed to anticipate up to nine percent. It’s under current law they’re allowed to anticipate up to nine percent,” he says. “How many people believe that last year, maybe more than a handful of cities met that nine percent?”

DePasquale says despite other fiscal challenges, two of Harrisburg’s three pension funds are fully funded.

“Two of the plans, for firefighters and non-uniform employees have been managed by the Pennsylvania Municipal Retirement System since the 1980s and they are both in solid shape,” he says. “As a result, Harrisburg has not had to make their annual minimum obligation payments to the two funds since 2010.”

DePasquale says similar moves by other municipalities could help to trim the growing problem of pension debt in Pennsylvania, which currently stands at $7.7 billion.

After being appointed by Governor Tom Wolf to lead a task force on municipal pensions, DePasquale  delivered a  report to the governor in less than 60 days.