Jeannette underpaid its three pension funds by $189,356 in 2021, and the state auditor general’s office said turnover in the fiscal office in 2020 and 2021 contributed to the error.
The compliance audit of the city’s fire, police and nonuniformed pension plans recommended that Jeannette add the amount, plus interest, to this year’s minimum municipal obligations from the general fund. City manager Ethan Keedy said he is awaiting a final total for the interest.
“It’s been correct for 2022, 2023 and the amount we have in 2024,” he said, adding that the auditor general’s office OK’d those amounts. “We won’t have that issue moving forward.”
The three pension funds for retired city workers are funded, in part, by .4% in earned income taxes. Municipalities also receive state aid and, in Jeannette, employees covered by collective bargaining agreements pay into the fund, according to the compliance audits.
The earned income tax was raised in the mid-2010s as the city grappled with underfunded pensions. It was decreased to the current rate — 1.4% — in 2020. That came after years of fluctuations, to as high as 2% in 2015, as the city caught up on its overdue obligations for the funds.
Payments to the pension plans must be made in certain amounts from specific accounts. The underpayment issue was a result of money being moved to the funds from a wrong account in 2021, Keedy said. The amounts were calculated incorrectly in the 2021 budget.
He said the auditor general’s office described it as a minor misstep and praised the work that has been done to reverse the issue with underfunded pensions.
“Not too long ago, these funds were barely 50% funded,” Keedy said.
The city also owes the state $4,797 plus interest for overpayment of aid related to a nonuniform employee who was actually retired. Turnover also contributed to that issue, according to the audit. Keedy said he is awaiting a final amount for interest.
Michelle Langdon, who is now a city councilwoman, retired as chief fiscal officer at the end of 2020. Her replacement worked for a short time until mid-2021. Keedy started in June 2021.
