(The Center Square) – While many townships and cities in Pennsylvania get docked by the auditor for a lack of oversight that could cause problems in the future, others are flagged for financial mistakes. Those mistakes can mean too much or too little state aid — or underfunding pension plans that lead to more debt landing on taxpayers.
A recent audit report, for instance, found that Turtle Creek, a borough in Allegheny County, failed to make its minimum payment to its non-uniformed pension plan in 2021 and 2022, totaling about $15,000.
“We recommend that, in the future, plan officials properly determine the amount of the amortization of unfunded liability component to be used in the (minimum municipal obligation) calculation,” the audit report noted.
The mistake happened due to inaccurate information from the plan’s custodian.
The auditor found similar problems in the police pension plan for Waverly Township in Lackawanna County. There, officials had returned almost $10,000 to the Commonwealth from an overpayment in state aid in 2019, but understated payroll in 2021 which led to officials underfunding the pension by $4,000.
“The 2021 payroll was underestimated, and the township’s internal control procedures were not effective to timely identify the understatement and ensure the accuracy of the MMO for 2021,” the audit report noted.
The pension funding ratios for both Turtle Creek and Waverly, however remained healthy despite the errors. Turtle Creek had a funding ratio of 103 percent, while Waverly had a 101 percent funding ratio.
However, East Lansdowne, a borough in Delaware County, couldn’t avoid criticism on that front. There, the auditor noted its police pension plan was in moderate distress.
“We are extremely concerned about the funded status of the plan contained in the schedule of funding progress included in this report which indicates the plan’s funded ratio is 59.9 percent,” the report noted. “Based on this information, the Public Employee Retirement Commission issued a notification that the borough is currently in Level II moderate distress status. We encourage borough officials to monitor the funding of the police pension plan to ensure its long-term financial stability.”
Pennsylvania municipalities are classified as minimally distressed when their funded ratio is 70 percent to 89 percent, moderately distressed at 50 percent to 69 percent, and severely distressed at less than 50 percent.
East Lansdowne, the report noted, had four active members in its pension plan and four retirees receiving benefits. The plan had about $1 million in unfunded liabilities.
Boroughs and townships aren’t the only ones who have pension issues. The auditor warned the City of Lancaster it must repay $26,000 in state pension aid and the City of Bethlehem to repay $15,000 in state pension aid. Not all errors lead to local governments repaying the state, however. Recently, the auditor also found that West Caln Township in Chester County was owed $20,000 to support its pension plans.
Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.
This article was republished with permission from The Center Square.