Pension reform would save Allegheny County more than $1.1B
Pension reform legislation that Gov. Tom Corbett intends to sign will save Allegheny County more than $1.1 billion over 50 years.
Central to the bill's reforms is a limit on the amount of overtime to be used to determine pension payments, to help prevent employees from “spiking” their salaries with overtime during their final years, padding their pensions.
Pension payments are calculated based on the average monthly salary earned during the highest-paid 24 months in the final four years of employment. Under the reforms, payments will be based on the average of the highest-paid 48 months during the final eight years of employment.
“I'll call it an anti-spiking bill,” said county Executive Rich Fitzgerald. “This spiking of overtime was just draining the system and putting the system at real risk.”
A study by county Treasurer John Weinstein's office examined 30 retirees suspected of spiking their salaries and found that the practice cost the county $900,000 annually. One employee increased his annual pension payment by $56,000, the study found.
Weinstein said the county's pension system was not faltering but that the reforms will “put it in strong financial shape for decades to come.”
The reforms will apply to employees hired after Jan. 1, Weinstein said.
Former North Braddock police Chief Henry Wiehagen, the president of Fraternal Order of Police Lodge No. 91, which represents county police officers, thinks the overtime cap strips officers of a bargaining tool.
“I don't feel that should be a law. That should be a negotiation item,” Wiehagen said. “What's next? What law are they going to pass next to get around a bargaining item?”
The FOP eventually supported the bill, said state Sen. Randy Vulakovich, R-Shaler, who met with union heads to negotiate the reforms and helped shepherd them through the Legislature. Wiehagen, who met with lawmakers and county staff to discuss the reforms, said he is considering a legal challenge.
Vulakovich, a former police officer, commended the FOP for endorsing the reforms.
“There's always going to be push-back when you're going to lose something,” Vulakovich said. “Being a former policeman, I think that these guys are setting an example that this has to be done.”
County officials, union heads and lawmakers negotiated the reforms for more than four years. The bill passed the Senate on Dec. 10 and the House on Monday. Corbett will sign it, spokesman Jay Pagni said.
Aside from the overtime cap, the reforms include increasing the time it takes to begin accruing a pension to 10 years from eight, raising the time employees must work before taking a pension to 25 years from 20 and allowing the county to make further changes without going to the Legislature.
The Allegheny County Retirement Board, which met on Thursday, increased the county's contribution to the pension fund from 8 percent to 8.5 percent. County employees must match the county's contribution.
Aaron Aupperlee is a staff writer for Trib Total Media. He can be reached at 412-320-7986.