Yesterday Mark Guydish of the Times Leader wrote an Opinion piece concerning the pension situation facing Hazleton. His assessment came on the heels of an article written by Steve Mocarsky after Todd Eachus wrote a letter critical of Mayor Lou Barletta's financial moves concerning the pension funds in Hazleton.
Let's take a step back from all the rhetoric spewed in this episode of Guydish's Taxpayer Victim's Unit. A little homework usually provides the necessary education to make an informed decision.
There is a law called the Third Class City Code. If we go back to the Depression era we will find that the code was created in 1931. It is found in Purdon's Pennsylvania Statutes more commonly known in the legal circles as Title 53 Municipal and Quasi-Municipal Corporations.
In looking at 53 P.S. §895.102 one will find definitions relating to pensions. A "Pension Fund" is defined as "the entity which is the repository for the assets amassed by a pension plan as reserved for present and future periodic retirement payments and benefits of active and retired members of the pension plan". A "Pension plan or system" is defined as "the various aspects of the relationship between a municipality and its employees wtih respect to retirement coverage provided by a municipality to its employees". A "Plan document" is defined as the law, ordinance, resolution, or related documents which governs the various aspects of the retirement coverage provided by a municipality to its employees, including periodic retirement payments and benefits, administration, and funding".
Do you see a pattern in the definitions? Pension payments are not only the monthly stipend provided by the plan according to the barganning agreement but also explicitly includes "BENEFITS."
The issue at hand is whether the City of Hazleton used money provided for by law, specifically Act 205, to be collected for pension payments to also be used for benefit payments. Auditor General Jack Wagner has ruled against the City of Hazleton and the Mayor believes his ruling to be incorrect according to the language of the law written above.
From the press release on the Auditor General's website. Auditor General Jack Wagner said today that an audit of the City of Hazleton’s police and firefighter pension plans found that the city improperly spent more than $1.5 million of special municipal pension tax revenues to pay for retirees’ health-care benefits....
Act 205 of 1984, the state law authorizing collection of the tax, requires that revenue from the tax be used exclusively to fund a municipality’s pension plans. Neither Act 205 nor any other state law permits using the tax revenue to pay for post-retirement health-care benefits or to buy back unused leave.
Wagner noted that Hazleton had properly exercised its right to pay retirees’ health-care benefits from general funds before 2003.
If the definition of a Pension Fund is the entity which is the repository for the assets amassed by a pension plan as reserved for present and future periodic retirement payments and benefits of active and retired members of the pension plan" how does Wagner find solid legal ground for his determination?
In the Auditor General's determination he opines that the City erred by using Act 205 money to fund retiree's health benefits. AG Wagner believes that the money can solely be used to defray the additional costs which are directly related to the pension plans of the municipality. If we go back to the definition of the "Pension plan or system" the defining words are too broad to limit retirement coverage solely to the monthly stipend.
The trouble with AG Wagner enforcing his determination lies in the travesty to the citizens of Hazleton. At this point there is no expense to the citizens of Hazleton nor the Commonwealth of Pennsylvania in the solution Lou Barletta found for his vexing pension issue. AG Wagner could force Hazleton into bankruptcy because its taxing ability is limited to 30 mills at the present time. The other option is for the Mayor and City Council to implement layoffs in the fire and police department to make up for the deficit that would be created by a payback.
If a law were passed it would have zero-impact on city residents and employees. If it isn't passed everyone would face a "Deep Impact."
If the Public Employee Retirement Commission(PERC) does not have a problem with Barletta's solution why does Todd Eachus? If the Senate voted 49-0 to support a legal remedy why is it that Todd Eachus has a problem?
From Steve Mocarsky's article: Eachus said he’s busy working to try to balance the state budget, which he said is “facing the largest deficit since the Great Depression” – $3.2 billion – and trying to find a fix for the city’s problem right now is impractical. Uhhh Todd, who got us into the largest deficit since the Great Depression? You and Governor Rendell. And are really too busy to help the people in your district?
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