News Talk 1240 WRTA | Taxpayer Group: Pensions Out of Control

Findings from TUA’s pension project on Altoona and Blair County are featured in this article at News Talk 1240 WRTA.
A national organization says public pensions are drowning local municipalities financially and leaving taxpayers on the hook for their costs.
Representatives from Taxpayers United of America paid a visit to Altoona on Tuesday to highlight the problem citing generous pensions that are currently paid to local municipal retirees. Rae Ann McNeilly tells WRTA News major pension reforms are needed to stave off the problem.
The group provided reporters with a list of top pensions paid to retired workers in the City of Altoona and Blair County. Dozens of pensions are valued at or above the $1-million mark each – many of them belonging to retired unionized workers.
McNeilly also says the system allows former public workers to retire on a public pension and then begin another public sector job collecting another taxpayer salary. The group will take their message to state lawmakers in Harrisburg later today. | Illinois pension reform group sweeps into Philadelphia

Findings from TUA’s pension project on Philadelphia are featured in this article at
A tax-reform group from Illinois is advocating for sweeping changes to state and local government pension programs by making an example of top-earning former Philadelphia municipal employees.
Retired Philadelphia Police Commissioner Sylvester Johnson tops their list with an annual pension of over $150,000.
The group, Taxpayers United of America, hopes knowledge of the high-end figures will energize the public to rally against what it sees as a corrupt and unsustainable tax-payer-supported government retirement program.
Included among those they’d like to see advocating on their behalf are the lower-earning members of municipal employee unions themselves.
“The rank and file are playing by the rules that unions and politicians have made, and they’ve been used as pawns,” said Rea Ann McNeilly, Outreach Director of Taxpayers United of America. “These pensioners, who work hard for their money, will one day go to the mailbox and there just won’t be a check.”
The idea of pension reform is not news to Philadelphia City Hall.
The city’s pension fund — which is paid for both by contributions from employees and by city tax payers — has been underfunded for years.
At this point, the city is so in over its head that it only has money for half of the pension payouts that it owes. Basically, it has around 4 billion dollars for an almost 9 billion dollar tab. (And this is actually an improvement over last year’s estimates).
Blame for the shortfall can be widely placed: imprudent labor deals past, the spike in baby-boomer-generation retirees (there’s currently more municipal retirees than there are workers), the 2008 stock market crash.
But, according to city finance director Rob Dubow though, the time for blame is gone.
“We’re at a place that — however we got here — we really can’t afford the level of benefits that we’re providing.” said Dubow. “The system we have now doesn’t really work for taxpayers and in the long run it won’t work for employees either.”
Ten years ago, about $200 million of the city’s annual budget went to pension pay outs. Now over $500 million does. Here Dubow points to the obvious: the more that goes to pensions, the less that goes to city services such as parks and recreation and the streets department.
The Nutter Administration says the only way to close the pension gap is by renegotiating labor contracts with the city’s two non-uniformed municipal-workers unions: District Councils 33 and 47. The former represents roughly 10,000 “blue-collar” workers, and the latter roughly 3,000 “white collar” ones.
As of now, the city and the unions are at loggerheads. The city says the pension system can be salvaged if the unions agree to a few key changes. They want current municipal employees to contribute a higher percentage of their salaries to the pension fund. And they want new hires to accept a “hybrid” retirement package that would include a limited taxpayer-supported pension, as well as an employee-supported savings fund such as a 401k.
Current retirees would continue receiving their benefits as contracted.
The unions have not bit on the deal, and — at least in the short term — have suffered for it. They haven’t received pay raises since 2008.
The Nutter administration maintains that it won’t renegotiate contracts until the unions agree to drastically reform the pension system.
Union officials claim that they shouldn’t be held responsible for what they see as the city’s poor financial management.
“They’ve gotten into this jam because of their actions,” said Bob Bedard, spokesman for district council 47. “The city didn’t put its share into the fund, and while they’ve skipped payments, the union members have continued to pay their share.”
Bedard also pointed to the fact that, historically, pensions have been government’s way of attracting top talent to lower paying public sector work.
“Generally, people who go to work for the city get paid less, but cities make employment attractive by offering more holidays and better benefits than private sector positions do,” said Bedard. “And now they’re trying to pay us less and cut our benefits because they run a bad government.”
Despite the unions’ displeasure with the Nutter administration’s plans, the prospect of a strike does not seem to be on the horizon.
“Being in an unhappy situation is better than being in a worse one,” said Bedard. “It’s hard to make up the money you lose by going on strike.”
Taxpayers United doesn’t think that city residents should be satisfied with the prolonged standstill.
“Somewhere along the line those negotiations have to be made and if these people don’t make the deals that fix the problem, the solution is to vote them out of office,” said McNeilly.
Below is a list of some of the city’s top pension recipients, including how much they earn in yearly pension, and how much they personally contributed to the fund during their tenure as city employees:
Sylvester Johnson: (Former Philadelphia Police Commissioner) Annual Pension: $152,440. Personally Contributed: $78,671.
Vincent Jannetti: (Former Financial Oversight Director) Annual Pension: $133,097. Personally Contributed: $84,134.
Dominic Sabbatini: (Former President of Penn’s Landing) Annual Pension: $131,206. Personally Contributed: $105,110.
Harold Hairston: (Former Fire Commissioner) Annual Pension: $125,921. Personally Contributed: $73,172.
John F. Street: (Former Mayor and City Councilman) Annual Pension: $116,387. Personally Contributed: $48,175.
Lynne Abraham: (Former D.A.) Annual Pension: $107,091. Personally Contributed: $141,476.
Augusta Clark: (Former City Councilwoman) Annual Pension: $99,196. Personally Contributed: $71,019.
The average annual pension paid to a city employee in 2011 was $18,148.

Times-Tribune | Mellow pension guided by state law

Findings from TUA’s pension project on Harrisburg are featured in this article at the Times-Tribune.
HARRISBURG – Former state Sen. Robert J. Mellow’s legal fate is tied to a federal plea agreement while a state law will determine whether he gets to keep his sizeable pension or not.
Mr. Mellow collects a $138,958 annual taxpayer-funded state pension. When Mr. Mellow left the Senate at the end of 2010, he also collected $331,025 in a lump-sum pension payment from the state retirement system.
The 23-page plea agreement released Thursday by the U.S. attorney’s office makes no mention of Mr. Mellow’s pension. State retirement officials will use the state Public Employee Pension Forfeiture Act or Act 140 to determine if Mr. Mellow’s planned guilty plea to the crimes of conspiracy to commit mail fraud and filing a false federal income tax in relation to his job as a senator triggers pension forfeiture.
Under this law, pension forfeiture is tied to specified crimes relating to employment “that breach the (SERS) member’s duty of faithful and honest public service,” according to the State Employee Retirement System.
The specified crimes include bribery, forgery, perjury, tampering with records, false reports to law enforcement authorities and certain crimes like theft by extortion and misapplication of entrusted property that reach the level of a misdemeanor offense.
“For every potential forfeiture case, SERS staff reviews the official court documents to determine if the (SERS) member was sentenced or pled to an Act 140 crime and if there is a tie to the member’s employment,” said SERS spokeswoman Pamela Hile on Thursday.
Case law has held that a conviction occurs at the point of sentencing or entry of a guilty or no contest plea, she added.
Mr. Mellow’s annual defined-benefit pension is based on his leadership-based salary, 40 years in the Senate and monetary contributions he made.
SERS allows retirees to also collect a lump-sum payment like Mr. Mellow has done which reflect any or all of the salary withheld from his paycheck over the years along with four percent interest. Taking the lump sum reduces the annual pension amount.
A Chicago-based taxpayer group that is seeking reforms in public pensions released this week information it compiled about top public pensions in Pennsylvania. Mr. Mellow’s annual pension ranks second among the top 25 state lawmaker pensions, said Taxpayers United of America.
Among lawmakers, the top annual $286,118 pension is collected by former Rep. Frank Oliver, a Philadelphia Democrat, according to Taxpayers United. The third highest pension is collected by former Sen. Raphael Musto, the long-serving Luzerne County Democrat who retired in 2010. Mr. Musto has a $127,033 annual pension. A federal grand jury indicted Mr. Musto on charges that he accepted $35,000 in free building renovations from Wilkes-Barre developer Robert K. Mericle as a reward for supporting state financing for a commercial park built by Mericle’s company. Mr. Mericle has not been charged in the case. Mr. Musto’s trial was postponed from February to at least June 4 because his lawyers say he is too ill to prepare for his corruption trial.