Three suggestions presented to change pension plans
HOLLIDAYSBURG – A suggestion to improve Blair County’s underfunded pension plan calls for using as much as $8 million from the Valley View Home sale proceeds to shore up the fund’s assets.
Two additional suggestions call for reducing the interest rate paid on employee contributions from 5.5 percent to 4 percent and eliminating future cost-of-living raises for retirees, at least until the pension plan is in better financial condition. Blair County Commissioner Terry Tomassetti and county Finance Director Robert Kuntz included the suggestions in a presentation made Monday to the county retirement board, which oversees the county’s pension plan. While the retirement board made no decisions, it will reconvene Aug. 26 when the options could be further discussed.
“We don’t have enough money to solve a 13-year problem,” Tomassetti said in reference to the county’s ongoing annual practice of allocating minimal or no contributions to the county pension plan. “But we can make a
The county sold Valley View for $16.1 million and has since paid expenses, fees and debt obligations of about $2 million.
Kuntz suggested segregating $8 million of the sale proceeds to support the pension plan, with $2 million funneled annually to the fund over a four-year period.
That process, Kuntz said, will allow the county to recoup some of the pension funding through reimbursements that some county departments seek and claim.
Controller Richard J. Peo, whose office administers the county’s pension plan and continues to process requests linked to the sale of Valley View, said he remains concerned about the impact of the sale on the pension plan. Because of the sale and the reduction in employees, the county will lose about $400,000 annually in contributions and add about $760,000 annually to pension payments for retirees.
A month ago, Peo asked if any money would be forthcoming from the sale to shore up the pension plan.
As of last week, the former Valley View Home employees had withdrawn $1.22 million from the pension plan and requests for additional withdrawals are expected through the end of the year.
Peo said he will take more time to review the report that he received at the meeting but remains “a little concerned” about the pension fund’s cash flow and future earnings. He also said that the use of the $8 million does nothing to address the remaining portion of the $29 million unfunded pension liability that Tomassetti and Kuntz referred to months ago.
“The only reason we’re addressing this now is because of the sale of Valley View,” Peo said.
Tomassetti referred to the plan “a very positive starting point.”