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Tax hike could fund county pension

Draft report shows $62 million shortfall

HOLLIDAYSBURG — Blair County commissioners might need a tax increase to make the county’s pension contribution next year.

After receiving a draft report showing that the Blair County Employees Pension Fund has a shortfall estimated at $62 million, Commissioner Chairman Bruce R. Erb said Wednesday his board is committed to making the fund whole again, which means a continuation for the foreseeable future of a $4 million annual contribution from the county’s general fund.

For several years, the commissioners used $2 million a year in reserve funds from the sale of the Valley View Home to pay half of the annual pension fund appropriation.

That reserve fund is now depleted, which means the commissioners must come up with an additional $2 million from the general fund in 2018.

Erb could not say on Wednesday if that would mean a real estate tax increase, but Commissioner Terry Tomassetti said, “You can’t rule that out.”

The commissioners, including Erb, Tomassetti and Ted A. Beam Jr., and Controller A.C. Stickel comprise the Blair County Retirement Board, which met with Alvin Winters, a representative of Maryland-based financial services company, CBIZ.

Winters distributed a draft report on the pension fund for 2017.

The report, which presented figures for each year beginning in 2002, showed for seven years past boards of commissioners put no money into the pension fund.

From 2009 through 2012, county officials appropriated $200,000 each year, but went back to zero in 2013.

When the Valley View Home was sold, the county increased its contribution to $2,220,000 in 2014 and $2 million in 2015.

By 2016 the contribution rose to $3 million, as Erb pointed out.

But that was not enough to reduce the shortfall in the near future.

The $4 million annual contribution does provide a light at the end of the tunnel, but it is a long way off. Winters’ figures show it won’t be until 2063 that the pension fund will be fully funded.

“This is what happens to a pension fund when you don’t do anything,” Erb said, aiming his comments at the past boards of the commissioners who allowed the unfunded liability to dramatically increase.

Erb, a former banker who served as director of trust services for the First National Bank in Hollidaysburg and who had oversight of pension programs for the bank, said Wednesday, “We have the worst funded county pension plan in Pennsylvania. That’s because it wasn’t funded.”

The board chairman said he has publicly committed to fully funding the plan, and the other two commissioners felt the same way following the review.

Beam said, “I think we are doing the right thing (maintaining a $4 million contribution).”

He said, “It is a factor we have to get under control.”

Beam made the point that if the pension fund is allowed to go bust — and Winter’s figures show that could happen if contributions aren’t maintained at a high level — the county will still have its pension obligation and the money will have to come from somewhere.

He said that the county could increase its annual contribution beyond the

$4 million mark.

“We are taking steps and it is showing,” he said.

Tomassetti said he wanted all along to increase the contribution from $2 million to

$4 million. He said if the present board allows the pension fund to fail, “We should be hung.”

He emphasized that he approved of the $4 million contribution and would favor an increase if the money becomes available.

“It (the obligation) is not going to go away,” he said.

As of January, the pension fund had 453 active participants (present employees), 494 retirees and 32 who no long work for the county but who are vested.

The average profile of a county worker is just over

45 years of age with more than nine years of service.

The fund has liabilities of more than $94 million and assets of $32 million.

The liabilities include

$12.3 million in employee deductions (money that can be taken by an employee when he retires), $23.6 million to present retirees,

$56.8 million to present workers and $1.8 million to those who no longer work for the county.

Controller Stickel said the present county board has adopted policies and procedures to address its pension problems and said he wasn’t surprised by Wednesday’s report.

The state of Pennsylvania is in a similar situation, he emphasized.

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