DePasquale 'extremely concerned' about Clairton's police pension fund
The chickens may have come home to roost for Clairton's police pension plan.
The city didn't pay any minimum municipal obligation into the plan since the turn of the century because it wasn't required to by law. But state Auditor General Eugene DePasquale told city officials last week that they have a $49,823 obligation for 2013, and may pay more than $100,000 this year.
“We could have demolished 10 buildings with that,” said Howard Bednar, who begins his fifth year as city manager this month. Before that, he was borough manager of West Mifflin.
“We would have been better off giving more.” Mayor Richard Lattanzi conceded when he and others on city council reviewed the results of the latest biennial state audits with Bednar at their workshop last week.
Even as a distressed municipality since 1988 under state Act 47, Clairton hadn't received any state pension aid from at least 1999 through 2013, and saw the ratio of assets to liabilities in its police pension plan plummet from 50 percent in 2007 to 19.3 percent in 2013.
“Somebody at the city should have been more forceful with the state,” Bednar said.
DePasquale wrote to city officials on Feb. 26 that “in all significant respects, the City of Clairton Police Pension Plan was administered in compliance with applicable state laws, regulations, contracts, administrative procedures, and local ordinances and policies.”
But DePasquale added that “we are extremely concerned about the funded status of the plan ... which indicates the plan's funded ratio is 19.3 percent as of Jan. 1, 2013.”
In October, council accepted an allocation of $92,944.32 from the Pennsylvania Municipal Retirement System, which provides aid to local pension programs based on receipts of a 2 percent tax on out-of-state companies that sold casualty insurance policies to Pennsylvania residents.
By comparison, Bednar said, “West Mifflin had been getting state aid every year.”
On Thursday, DePasquale made the results of audits of Clairton's three municipal pension funds public, reporting no problems with plans for firefighters and nonuniformed employees.
The 19.3 percent ratio for the police pension plan is derived by dividing the actuarial value of assets ($346,497) in the fund by the unfunded actuarial accrued liability ($1,797,229).
That ratio has been dropping over the years as the asset value dropped and the accrued liability rose. It was 30.9 percent in 2011, 42.8 percent in 2009 and 50 percent in 2007. In 2007 the actuarial value of assets was $996,284 while the unfunded actuarial accrued liability was $1,991,607.
Bednar described the problem as negative credit, comparing the city's police pension fund situation to a maxed-out credit card account.
“You have a $10,000 credit card and spend it all,” Bednar said. “The card company says, ‘We're going to give you a $500 credit, but now you owe us $10,500.'”
As described by the Auditor General's Office, Clairton's police pension plan is a single-employer defined benefit plan established in 1940, into which active members are required to contribute 7 percent of their compensation.
At the end of 2013 there were eight active members and 16 retirees receiving benefits funded through annuities purchased with plan assets.
Bednar came to Clairton nearly a year after the departure of Ralph Imbrogno, who was city manager from January 2000 to June 2010. Imbrogno later pleaded guilty to theft in a bid-rigging scheme involving his son's company and West Mifflin Area School District.
He was sentenced in early 2013 to five months in a halfway house, followed by five months of house arrest.
Lattanzi said city officials want to meet with representatives of DePasquale's office to discuss the audit.
Patrick Cloonan is a staff writer for Trib Total Media. He can be reached at 412-664-9161, ext. 1967, or pcloonan@tribweb.com.
