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Nonprofits offer help with Pittsburgh pension problems, Peduto says

Bob Bauder
| Wednesday, March 4, 2015, 11:48 p.m.

Pittsburgh has a draft proposal from a group of large nonprofits willing to make payments that would help the city resolve chronic pension, debt and infrastructure liabilities, Mayor Bill Peduto said Wednesday.

Peduto joined state Auditor General Eugene DePasquale in calling for state pension law changes, but because prospects for such reforms are uncertain in the Legislature, the city is looking to nonprofits to help it reduce obligations to current and future retirees that total nearly $1.2 billion.

Peduto said the administration has met regularly since September with representatives of the “big four” — UPMC, Highmark, the University of Pittsburgh and Carnegie Mellon University — to reach a payment agreement. He said they have a draft, but he would not release details, saying they're being negotiated.

“We're looking for payments, but the payments would be used for specific purposes outside of the day-to-day operations of the city,” Peduto said. “There would be representatives from each that would look on an annual basis at what the city's needs are.”

Reynolds Clark, chief of staff for Pitt Chancellor Patrick D. Gallagher's office, declined to comment on the agreement. Pitt and UPMC officials confirmed meeting with city officials.

Highmark spokesman Aaron Billger also confirmed the meeting but declined further comment.

“Carnegie Mellon has had positive discussions with Mayor Peduto, his team and other nonprofit institutions in the region, and we are eager to continue these conversations,” spokeswoman Abby Simmons said.

DePasquale released an audit that reviewed Pittsburgh pension funds from 2012 through 2013. Auditors found that city pension ordinances did not match collective bargaining agreements with police, fire and municipal workers. They found that the city made clerical errors that resulted in $4,254 in overpayments in state pension aid. The city is changing its ordinances and refunding the state money.

“(This is) taking the terms of collective bargaining agreements, (and) putting them in the city code where they have not been before,” Pittsburgh Finance Director Paul Leger said.

Peduto said Pittsburgh is “barely keeping its head above water” coping with a mounting pension liability that has increased by nearly $150 million since 2013. As of December, the city had about 58 percent of the money needed to cover those future costs. That figure was 62 percent in 2011.

DePasquale said municipalities and the state owe a total $8 billion in unfunded pension costs.

Mayors across the state have organized to urge the Legislature to act, and DePasquale said he would be “relentless” in seeking legislation that would allow cities to offer employees defined contribution, rather than a defined benefit, plans; limit the impact of overtime pay on pension payments; remove pension benefits from the collective bargaining process; and give cities like Pittsburgh a larger share of state pension funding.

Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or bbauder@tribweb.com.

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