State officials announced Monday that Pittsburgh's pension fund is above the required percentage needed to keep it under city jurisdiction. The state Public Employee Retirement Commission (PERC) said it would take over administration of the fund if it was not above 50% of the amount owed by January 2011. City Council passed a bailout December 31st of last year that included $735 million in parking tax revenue to bolster the fund over 31 years. PERC Executive Director James McAneny said the first evaluation sent to the state earlier this month failed to reach the minimum, but a revised evaluation shows the fund at 62%.
Pittsburgh City Council and Mayor Luke Ravenstahl fought last year over how to bolster the fund. Ravenstahl's proposal to lease the city's parking garages and meters for 50 years failed. The council passed an alternative that includes raising parking rates and dedicating the revenue to the pension fund.
Michael Lamb, Pittsburgh Controller and one of the creators of the plan, said that it would have been disastrous to have to hand administration of the fund over to the state. "We would have seen significantly higher payments into the pension fund in the very near term, probably as much as $100 million, which right now, the city just can't afford to do that," said Lamb. "So we tried to put together a plan that increases funding over time, but does it at a much slower rate. And so, while we'll end up at the same place being fully funded, we get there in a different way than the state would recommend."
Lamb said this is only a small step in solving the city's pension problem. "We still have a very significant, long term problem in dealing with the funded status of this pension. Moving $13 million a year and the $26 million a year into the future into the pension fund is a good first step," said Lamb. "We need to make that commitment to fund this pension plan. But we also need to work in pension reforms that will help us hold down costs."
According to Joanna Doven, Press Secretary for Mayor Ravenstahl, the mayor is excited over the state's decision and is not resentful his plan did not make the cut. "We operate on what is real and what is happening now, not on what we wish could've happened," said Doven. "Certainly his plan did have benefits, but however, the plan was not passed. Council's plan was passed and that's the plan that we are working with."
