Following Pension Tension, Pittsburgh's Schemes Gain Value

(February 11, 2011) — According to Pittsburgh’s Comprehensive Municipal Pension Trust Fund Board, the city’s struggling pension funds made money in the last three months of 2010.

The Pittsburgh Tribune-Review reported that the City Council believes the funds’ value will exceed $500 million, after they were valued at nearly $290 million, or at about 30% of their obligations, in September 2010. Controller Michael Lamb said his best estimate is that the Pittsburgh funds contain about $325 million, and that when factoring in the parking money, there is $525 million to $550 million.

The state Pennsylvania Employee Retirement System is expected to have a final decision on the pensions’ December 31 value by September.

After months of back-and-forth between Pittsburgh Mayor Luke Ravenstahl and City Councilors, both sides reached a pension funding solution, involving the injection of future parking proceeds into the severely underfunded pension plan. On December 31, with eight hours to go before the city’s 29%-funded scheme would have been taken over by Pennsylvania’s Municipal Retirement System, City Council overrode a Mayoral veto and in doing so promised to devote future parking tax proceeds to the pension system.

The Pittsburgh scheme is one of the most underfunded in America. One proposal to fix it, championed by Mayor Ravenstahl but rejected by Council, would have sold many of the city’s parking garages and spaces to Connecticut-based LAZ Parking for $452 million, a figure well in excess of the minimum required pension payment.