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WILKES-BARRE — A report from the state Auditor General Eugene DePasquale on the city’s pensions found still uncorrected compliance issues for some of the plans and encouraged continued efforts to address them.
A review of two years of the city’s five pensions showed reoccurring problems that had been identified in a past audit, such as payments in excess of what is permitted by the Third Class City Code and unauthorized buybacks when moving from one plan to another.
“We are concerned by the city’s failure to correct these previously reported audit findings and strongly encourage timely implementation of the recommendations noted in this report,” DePasquale said.
His report looked at the city’s aggregated pension trust fund from Jan. 1, 2014, to Dec. 31, 2015. It also placed the city plans in “moderate distress status” with an assets to liability funding ratio of 62.1 percent as of Jan. 1, 2015. The plans had $80.9 million in the actuarial value of assets compared to $130.4 million in liability. The ratio dropped more than 10 percentage points from the 72.5 percent ratio on Jan. 1, 2011.
City Administrator Ted Wampole said the problems identified in the report have been around for years.
“I thought the Auditor General’s report was very fair and very accurate. Those issues are probably what has contributed to the valuation levels in those accounts,” Wampole said.
The excessive payments, cited in the police and fire relief plans, could increase costs and reduce the amount of funds available for payment, investment or administrative expenses, the report said. Furthermore, the payments could result in state aid the city is not entitled to or higher monthly minimum obligation payments to the plans by the city.
The report reached the same conclusion for the buybacks, cited in the police relief and non-uniformed employees’ plans, that are not authorized in the code for third class cities.
City officials agreed with the report’s findings and recommendations to comply with the code, but added they have been unable to make changes due to the collective bargaining agreements with the unions.
The excessive payments are “not necessarily illegal,” Wampole said. That issue has been a point of contention with the unions, he said.
The contracts with the Teamsters Local 401, Laborers’ International Union of North America Local 1310 and the International Association of Firefighters Local 104 expired last year. The unions are working under the terms of their old contracts. The contract with the Police Benevolent Association, representing members of the police department, runs through 2019.
The firefighters union has gone to arbitration over its contract.
Wampole said the city is trying to address the compliance issues in its ongoing contract negotiations.