Pittsburgh City Council wants to eliminate pension provision

Pittsburgh City Council is moving to eliminate a provision in the city’s pension ordinance that would reduce payments to some elected officials. As it stands, the provision would cost Councilwoman Darlene Harris about $700 per month in her monthly payout after she retires in January.

Councilman Ricky Burgess of North Point Breeze on Tuesday plans to introduce a bill that would eliminate a so-called Social Security offset for elected officials, including nine City Council members, the mayor and city controller. He is seeking a rule waiver so council can discuss and have a preliminary vote on Wednesday.

City employees, with the exception of firefighters and police, are subject to the offset, which calls for a reduction in pension payments by 50% of the amount received from Social Security after an employee reaches maximum Social Security retirement age. The provision applies only to city employees hired after June 30, 2004.

Harris of Spring Hill, who lost her seat in the Democratic primary, is retiring on Jan. 6, her 67th birthday and last day in office.

Burgess and Harris declined comment as did council President Bruce Kraus.

Mayor Bill Peduto’s office voiced concerns about potential impact on pension funds. Peduto is among employees grandfathered in 2004, having become a city employee in the 1990s as a city council staff member.

“Tentatively, there are concerns about the legality of the bill and the huge negative impacts it would have on the health of the city pension fund should the benefit also be expanded to other city employees, as it was before the Act 47 fiscal reforms,” said Peduto spokesman Tim McNulty. “We have not yet calculated the estimated cost of this particular bill.”

McNulty said Peduto’s office received a copy of the legislation on Monday and the law department is reviewing it.

Council in 2004 approved the offset as part of the city’s efforts to avoid bankruptcy. Pittsburgh in 2010 narrowly avoided a state takeover of chronically underfunded pension funds by dedicating $735 million in parking tax revenue over three decades to put the funds above a state-mandated funding threshold of 50% of what was then $1 billion in obligations.

The city as of September had about 60.5% of funding necessary to cover $1.3 billion in current and future pension payouts to police, firefighters and municipal workers,

Councilwoman Theresa-Kail Smith said the offset is unfair.

“We have one person who’s affected now, that’s Councilwoman Harris,” she said. “I’d like to see how we can address that issue and have a longer conversation about what we could do for other elected officials and the other (non-union employees). I think (Burgess) is trying to get the conversation started and I’m thankful for that. It’s a conversation we need to have.”

Kail-Smith said she was concerned about the public perception of amending the ordinance for an elected colleague. She argued that municipal employees work for the city longer than politicians and have more of an opportunity to build their pensions.

“Elected officials don’t have the time to build the pensions that others have,” she said. “I actually question whether it’s legal to do.”

Council has authority to eliminate the offset for non-union employees, but would have to negotiate with unions to change pension provisions in their contracts. Council officials estimated it would cost city pension funds about $7 million per year if the offset was eliminated for about 550 non-union employees. The impact, they said, of one eliminating it for Harris would be “minimal.”

The city has about 3,300 total employees.

John Sibbet, president of the municipal pension fund, described the offset as “mean-spirited, horrible situation” and said many employees are unaware of it until they apply for a pension.

“People work their entire lives expecting to get a pension and when they reach full Social Security age their pension is cut in half,” he said. “There’s people who leave the pension office with tears in their eyes after they find out about this Social Security offset.”

Robert Swartzwelder, president of Fraternal Order of Police Fort Pitt Lodge 1, said city officials have objected to any increase in police pensions during ongoing negotiations for a new contract.

“They’ve vehemently objected to it,” he said. “Now politicians are going to pass their own pension enhancement.”