Scranton mayor wants Pennsylvania to manage city pension funds

Reuters News
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Posted: Jun 25, 2015 7:39 PM

By Jessica DiNapoli

(Reuters) - Scranton, Pennsylvania, Mayor William Courtright said on Thursday the state should take over the city's pension system after a report found problems with past benefit awards in one of the funds.

Courtright, a Democrat, said the most recent report was a "wakeup call" and that he will ask for the support of Governor Tom Wolf in moving all of the funds to the Pennsylvania Municipal Retirement System.

"Bill after bill, report after report, and study after study have recommended taking this step," Courtright said in a statement, adding the benefits were awarded under a different mayor, city council, and pension board. "It's our job to fix it."

While many U.S. states have passed pension reforms aimed at improving their underfunded pension systems, thousands of small local governments still run their own funds across the country, some of which face difficulties. Pennsylvania alone has 3,200 such plans, nearly all of them with less than 100 members each.

Scranton's plan for non-uniformed employees is funded at 23 percent and could run out of money in two years. Its fund for retired firefighters is just 16 percent funded and could need emergency state aid to avoid insolvency, Pennsylvania Auditor General Eugene DePasquale said in May.

DePasquale released a report on Wednesday criticizing double benefit payments promised to non-uniformed employees as a retirement incentive in 2002. The city did not properly authorize the offers or analyze their financial impact, his report found.

The double pension payments cost the city about $2.9 million and contributed to the plan's dire financial condition, he said.

The report recommends that Scranton finish reviewing benefits paid to those retirees and consider whether to claw-back some of the payouts.

(Reporting by Jessica DiNapoli in New York; Editing by Hilary Russ and Andre Grenon)