Mayor Luke Ravenstahl today continued to express grave concerns of the financial impacts of a pension fund state takeover after Pennsylvania Municipal Retirement System (PMRS) Secretary Jim Allen presented the City with a 30-year mandated pension payment schedule that triples the City’s mandated annual pension payment in seven years. Under state Act 44, PMRS will take control of the pension fund next year unless the City deposits over $200 million into the fund by January 1, 2011. The PMRS payment schedule would require the City to make annual pension payments that average $121 million annually, which equates to nearly 40 percent of the City’s $450 million budget.
“I’ve understood the devastating effects that our residents and employees would face under a state takeover scenario, and I’ve done everything in my power to prevent it and protect this City from another financial collapse,” Ravenstahl said. “Hopefully today, the financial reality of these impossible payments becomes crystal clear for five members of City Council. I said all along that the numbers would not be pretty, but they are even worse than I expected.”
The PMRS actuarial advisor, Cheiron, presented a 42-page report to City Council that laid out the City’s minimum municipal obligation (MMO) payment under a takeover scenario. Scenario 3 on page 15 of the report represents the payments that would be required of the City, assuming that the City pays 75 percent of the required annual MMO payments until 2015.
The City’s current MMO is $45 million. According to PMRS Scenario 3, the City must make the following pension payments:
Thursday, November 4, 2010
Office of Mayor Luke Ravenstahl
512 City County Building | 414 Grant Street
Pittsburgh, PA 15219
telephone: 412-255-2626 | facsimile: 412-255-2687