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Pension board vote will force Pittsburgh to increase pension contribution $5 million

Bob Bauder
| Thursday, Dec. 12, 2013, 3:18 p.m.

One of Mayor Luke Ravenstahl's top lieutenants publicly broke ranks Thursday in a vote to lower Pittsburgh's projected annual rate of return on its employee pension funds.

The Municipal Pension Board, chaired by Public Safety Director Michael Huss, lowered the rate from 8 to 7.5 percent, a move that will force the city to increase its contribution to the funds by about $5 million annually.

The measure passed 5-2 with Ravenstahl voting in favor and Huss against. Ravenstahl Finance Director Scott Kunka, who serves as non-voting executive board director, argued against the decrease.

Ravenstahl had consistently opposed lowering the projection, and his switch triggered accusations of political maneuvering from incoming Mayor-elect Bill Peduto's administration.

“I believe the intentions were just to tie the hands of the next administration,” Huss said.

Ravenstahl, who voted by telephone, did so without comment. He later declined to comment through spokeswoman Marissa Doyle.

City Controller Michael Lamb and the Intergovernmental Cooperation Authority, one of Pittsburgh's state appointed fiscal overseers, have repeatedly argued that the board should drop the rate, citing volatility of the financial markets.

Kevin Acklin, who will serve as Peduto's chief of staff, said Ravenstahl's vote doesn't “smell right.”

“We have a mayor who spent most of his career defending (8 percent), because of what it's going to do,” Acklin said. “To do this the week before Christmas in the middle of a transition ... just doesn't smell right.”

Peduto sought input into Ravenstahl's 2014 budget, but the mayor-elect's reorganization of government was included as an addendum, not as part of the main spending plan.

Acklin said Peduto could reorganize the board after he takes office in January.

It was unclear whether the city will have to start paying the extra $5 million in 2014 or in 2015, but Lamb said it doesn't matter because Pittsburgh has committed that amount voluntarily for 2014 via state gambling revenue.

He said adding money to the pension funds is the only way Pittsburgh can dig its way out of a $1 billion liability owed to current and future retirees. As of November the unfunded liability was about 37 percent.

“We're never going to get out of it just with market performance,” Lamb said.

Joining Ravenstahl in voting to lower the projection were Lamb, City Council President Darlene Harris and representatives of city police and firefighters unions.

Ian Frankel, who represents city paramedics, voted against it.

Bob Bauder is a staff writer for Trib Total Media.

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