You know how Mayor Ravenstahl and others have been lobbying Harrisburg for a statewide pensions fix? As they say, "Be careful what you wish for, you just might get it".Under the state's new proposal, all municipal pension funds with less than 50% funding (that's totally us) would be taken over by the state. The state would determine how and when we pay into it, how and when it pays out, and who gets to handle the investing.
Scott Abel, an Atlanta-based analyst with Mercer Investment Consulting, which handles the city's pension fund portfolio, called the emerging legislation "the most ridiculous chicanery that I've ever heard." (P-G, Rich Lord)
One can therefore safely disregard that hyperbolic statement, seeing as how the proposal would take Abel's business portfolio right out from under him. However, many in the city are understandably distressed at sacrificing their control, especially over the prospect of holding out for dramatic fixes like leasing our parking lots.
"Hopefully, the worst is behind us," said Tony Pokora, the city's assistance finance director, noting that the fund rebounded from March lows in April and May.
[State Retirement Commission Director James L.] McAneny said the worst may be ahead, since investment losses of the past year won't be factored into pension funding formulas until next year. (ibid)
This is why I'm almost looking forward to some tough state love. Almost.
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Never mind yesterday morning's skepticism -- Peduto's proposed oversight panel for the spendulus porkulus money (I've been listening to too much Rush Limbaugh) is likely to pass. I don't know its details and it may well be amended, but something close to it will pass.
Yes the fireworks between Council President Doug Shields and Chuck Half of PittMAPS were eyebrow-raising, see the P-G's Dennis Roddey.
The real news I saw was that Councilwoman Harris and Councilwoman Smith were asking all sorts of tough questions, sounding extremely interested in ensuring that they would be briefed in advance on anything they might be asked to sign off on. They also wanted to see their own projects get a real nice transparent fair hearing.
If this is an issue about -- well, about the Council's fundamental control over public spending -- you will probably be able to add Councilwoman Payne to this column, who does have a record of being a watchdog for the Council's powers. So there's your math and then some. Of course, Payne was absent from the special meeting, as was Burgess and Motznik, so there may still emerge a novel counterargument to the legislation, possibly legal in nature.
The other news is that Councilman Peduto was again all composed and effective, which is weird getting used to.
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Tying up loose ends: the Hill District community benefits agreement appears to be making itself useful.
The Hill House Association yesterday announced that nine community organizations will receive funding this year. The funding will come from the $3 million Bank of New York Mellon agreed to contribute to the Hill District Neighborhood Partnership Program over a six-year period. (P-G, Karamagi Rujumba)
Alright, briefly and only for background's sake: the Agreement brought funding for a grocery store (which looks like it will be a Kuhn's developed by the Hill House) and it arranges for money for community programs (doled out by the Hill House). It was the Hill House's great privileges due to its "stature in the community" (words taken from the formal CBA) and the relatively limited or nonexistent scope of resources available for 'economic development', 'historic preservation', 'direct investment' or what have you that made the CBA so controversial in some quarters.
Yet we can all see some resources manifesting, which is why it was never fashionable to outright bash the CBA in most quarters.
They could have done a lot better, they could have done a lot worse.
As stated, the Master Plan for the 28 Acres and Beyond is where the action is now. Pittsburgh is waiting on responses to a URA RFP from which they will select a consultant to create the Master Plan. If City Planning and/or the URA and/or the community is meeting in any meaningful way to begin the planning and envisioning process, it is happening below my own radar.
Yet we can all see some resources manifesting, which is why it was never fashionable to outright bash the CBA in most quarters.
They could have done a lot better, they could have done a lot worse.
As stated, the Master Plan for the 28 Acres and Beyond is where the action is now. Pittsburgh is waiting on responses to a URA RFP from which they will select a consultant to create the Master Plan. If City Planning and/or the URA and/or the community is meeting in any meaningful way to begin the planning and envisioning process, it is happening below my own radar.
The projects to be funded include programs for financial literacy, tutoring, substance abuse, establishing green space and no-interest loans for home improvements. The funding is backed by tax credits that BNY Mellon sought from the Pennsylvania Department of Community and Economic Development. (ibid)
It was the state DCED's approval of the tax-credits for BNY Mellon's generosity that provided today's news hook. If they hadn't approved the tax-credits, it kind of would have been bad.
Hopefully, the worst is behind us," said Tony Pokora, the city's assistance finance director, noting that the fund rebounded from March lows in April and May.
ReplyDeleteIs this guy kidding?
"One can therefore safely disregard that hyperbolic statement, seeing as how the proposal would take Abel's business portfolio right out from under him."
ReplyDeleteNot at all Bram. Mercer got the fund management contract for a dog of a pension fund and began its work last year. I am sure they wont miss the management of a fund so distressed.
The idiots in Harrisburg want to impose a 6% acutuarial assumption upon Pittsburgh. Until last December it was 8%. It was reduced by the Pension Board to 7.75.
The effect of lowering this value reqiures an increased minimal pension payment. Moving to a 6% assumption, while a mere 2 points from last year, would have a devastaing effect on allocation of city revenues. Most of it would be going to pension payments with not much left to pay police fire and other municipal employees and departmental operating costs.
In order to function, the city would be obligated to significantly increase wage and property taxes. Or simply cease to exist. Which some people like Onorato and his republican buds would love to have happen.
We city residents can easily avoid all of this by simply moving to Cranberry. By the way Cranberry employees contribute zero to thier pension fund. Last year Cranberry got $300K from the state's distressed pension fund supplemt (Act 205). That was courtesy of Sen. Jane (I hire furries) Orie.
Jane and her repub math wizzards plan assumes these distressed municipalities, Pittsburgh included, with even more distressed pension funds would experience an annual 5% revenue growth. Pittsburh has been lucky to see 2% over the past 10 years.
The pension payment requirements under this hairbrain scheme promoted by repubs who can't add would be reasonable in the beginning but the out year payments (BIG HUGE BALLON PAYMENTS would essentially swing most of the operating budget into pension payments.
Scott of MERCER is spot on with the "Chicanery" remark because that is what this is. Perhaps "Lunacy" would have been a better choice of words.
BRAM: If you want to more "chicanery" see the Act 205 (distressed pension fund subsidies) paid to distressed muni's like uppper Saint Clair ($400K)and Cranberry ($455K) Neith muni has employee contributions deducted from pay check. http://www.auditorgen.state.pa.us/Allocations/02alloc.html
http://www.auditorgen.state.pa.us/Allocations/10alloc.html
This is a "pooled fund" with the more taking the subsidy leaving less for the truly distressed muni's. That keeps taxes low in very wealthy communities.
Bram before you shoot from the hip with stupid comments like the one above, check the numbers. Where is the Burg report when you REALLY NEED IT.
Burgher PLEEZZZZ come back!
Yes, because the Burgh Report was always all about the actuarial tables.
ReplyDeleteI maintain my note of caution that Mercer isn't the most disinterested source, but your information is all extremely, extremely well taken.
What's the City's solution? Assuming the Parking Lease gambit falls through, or that it only manages to get us X far for Y more years? And assuming our Tax Crusade falls on deaf ears because of a perceived lack of being fully housebroken?
"That was courtesy of Sen. Jane (I hire furries) Orie."
What's this? Like, MULTIPLE furries? Is she the one we need to thank for bringing Anthrocon to the region?
the solution is to merge all munis into one city county
ReplyDeletedisinterested or not....The "chicanery" statement is indeed accurate
ReplyDeletewhile there is a wonkish debate to be had on assumed rates of return and other such details... If I were a worker I would want the city to assume a lower rate of return because it would force greater contributions into the fund.. but of course that means city is hurting to make those higher payments. But seriously, it's not worth having that debate other than for debates sake. At this point it is all academic. Baring something extraordinary the pension funds are so low at this point they are past the point of no return. Burn rate is such and funding ratio so low that it just does not matter what the investment return is. Does not matter.
ReplyDeleteHave to admit I have been a bit perplexed by some of the consistent anti-Mercer sentiment out there (theTruth is lurking yes?). I am sure there are things worth debating somewhere in there. For the moment, the only real quibble I have with them is that I think its within their fiduciary responsibility to make clear how dire the funding situation is given the cash outflow. However, I suspect they do not think that is their job especially given the Act 205 reporting fwiw. But yeah, this contract is soon to be worth a fraction what it was if you go back to the period when they actual were bidding for the contract.
A bit more on pension issues and that which is now being labeled 'chicanery' I mused on some years ago.
....BREAKING NEWS...... JOHN MASEIO PASS A WAY
ReplyDeleteThis guy? What?
ReplyDeletehttp://www.alleghenycounty.us/council/jm.asp
john was a hell good guy
ReplyDelete"If I were a worker I would want the city to assume a lower rate of return because it would force greater contributions into the fund"
ReplyDelete"The same city worker would also risk losing their job because there won"t be enough $ for the pay check."
Which is why firefighters from accross the state are going to Harrisburg to demonstrate. Joe King's quote in the P-G, "We're going to shut it down."
I wouldn’t think the issue that has Joe riled up is the rate of return assumption. There are lots of big implications to a de facto state takeover of the pension funds. If I were him the rate of return assumption is the least of his problems. But again, it really does not matter. 6%, 8%, 8.75%... actually I’m not sure anonymous above is correct in saying that the assumption was lowered from 8% just last year. The assumption was actually 8.75% for decades which is one of the big problems. The funding ratio is so low, especially for the police, that parts of the system are going to be forced into a pay as you go type of accounting no matter. You could make that assumption 10%.
ReplyDeleteHave to admit I have been a bit perplexed by some of the consistent anti-Mercer sentiment out there (theTruth is lurking yes?). I am sure there are things worth debating somewhere in there.Yes Sir. 5 points of discussion.
ReplyDeleteWhat kind of return does Mercer have since taking over our assets?
Is this return above average?
What kind of fees are they charging to manage our funds?
Who selected them to manage our assets? Why?
Joe King has reiterated, exposed and complained about the severely under funded city pension system for as long as I can remember, it goes back as far as Caliguiri. Specifically spiked when Sophie was Mayor and gave City Police Officers a 3/4 pension.
ReplyDeleteThe thing that caught my eye about the new proposed State run distressed pension fund was this: "The state would determine how and when we pay into it, how and when it pays out" (emphasis mine). Do we care that municipal retirees might suddenly get much less than the pension they bargained for (literally and figuratively)? I mean, maybe this is the price we pay for having elected who we elected (now Bram's allusion to the emperor in Star Wars "Only now, at the end, do you finally understand ..." makes sense). Maybe the G-20 will be treated not to young anarchist protestors, but older retired cops and firefighter, drawing global attention to Pittsburgh and Pennsylvania’s mistreatment of retirees.
ReplyDeletebut the underfunding is mostly the result of the unrealistic rate of return assumption used in the past. So it is contradictory to argue against the underfunding and against lowering the rate of return assumption.
ReplyDeleteEd, I think I overstated / misunderstood things when I wrote that sentence. A state takeover would see us "relinquish[ing] control over new employees benefits", but what is contractually owed to veteran employees apparently would remain unmolested. Nothing but a bankruptcy could imperil those.
ReplyDeleteBram, that is how I understand this also. What hasn't been said is that the city had been raping the pension fund for many years.
ReplyDeleteNow,after cutting down the work force in every department you have less workers, and more retirees than workers. Less workers paying into the pension fund, a fund that the employer dipped into, and consistently failed to contribute their share for many, many years.
Well, I wonder if the State legislature could legally imperil the pensions owed to current retirees and veteran union municipal employees. But I will set that aside, I myself shouldn't suggest something I have not actually read.
ReplyDeleteSo the cops, firefighters and other unionized municipal employees would go to a 401K type retirement plan. I think that is a fine idea, but I'll bet the firefighters in particular are seeing a lot they don't like in the amended Act 47 plan and this pension proposal.
There is relatively clear PA legal precedent that the state can't by fiat do much to modify existing pension obligations for public workers without the consent of the workers, which would mean the collective bargaining agents i.e. the unions that negotiated their contracts. So for example they can't pass any legislation to change pension payouts and they know that. They can legislate all sorts of things about how the pension is managed and municipal contributions, but no they can't go in and just say pensioners get a dollar less than what their pension says they get. I'm sure there could be fights over some details I am sure. I'm sure that in the administration of the system there are lots of routine decisions that I am sure many don't want being done in Harrisburg.
ReplyDeleteWhy would you want decisions made in Harrisburg? Because the state makes great decisions and is run so well? What do State Senators and State Representatives pay for their Health Care?
ReplyDeleteI'm not arguing for what the state is proposing?? As I said, it really does not matter at this point.
ReplyDelete