County’s pension shortfall narrows
Latest audit shows liabilities decreased by $14M last year
HOLLIDAYSBURG — Blair County’s latest audit has revealed an improvement in its underfunded pension plan. Liabilities decreased by $14 million last year.
Auditor David Scott of Young, Oakes, Brown & Co. told commissioners Tuesday that the audit shows the pension fund’s net liability at $74.8 million. In the 2016 audit, the pension liability was identified at $89 million.
“I think most of us will agree that (the decrease) is attributable to the market and that the higher level of (county) contributions really helped a lot,” Scott said.
And the fund’s net liability could be even lower than $74.8 million when that figure is updated later this year with a new figure reflected in a forthcoming actuarial report, Commissioners Chairman Bruce Erb said.
The $14 million decrease, Commissioner Terry Tomassetti said, calculates to about a 16 percent reduction in one year.
“I think that’s very laudable, considering the circumstances we had in the past.” Tomassetti said.
The county’s underfunded pension began to draw commissioners’ attention in 2008 after eight years of making no contributions. During those years, commissioners believed that investment income and employee contributions were sufficient.
The market’s drop in 2007 and 2008 and the seating of new commissioners led to change.
Tomassetti and Diane Meling, who took office in 2008, along with incumbent Commissioner Donna Gority, budgeted $200,000 for the pension fund while working on the 2009 budget.
That budgeting practice continued annually through 2012. After making no contribution in 2013, county audits show that $2.2 million was set aside in 2014 for the pension, made up of $200,000 in general fund dollars and an additional
$2 million from the sale proceeds of Valley View Home.
In 2015, 2016 and 2017, the county again set aside
$2 million annually from Valley View Home proceeds toward the pension fund. And for the 2016 and 2017 budget years, the commissioners increased taxes and used a portion to make an additional $1 million pension contribution in each of those years.
For 2018, when commissioners levied a 25 percent increase in real estate taxes, they set the pension fund contribution at $4 million, an amount that Tomassetti suggested will need to increase.
“We’re going to have to look at an increase (in the pension contribution) ever year until we get to the level we need to be at,” Tomassetti said. “It can’t go lower. We can’t return to the past.”
Scott told the commissioners that if the stock market’s ongoing performance continues, that will be helpful.
But Erb said that he had been a recent seminar where a speaker advised: “You can’t invest your way out of a pension deficit.” Erb said he thought the speaker was looking directly at him when he said that.
“We are making significant strides on a problem that won’t be truly addressed for a long time,” Erb said. “But we’re moving in the right direction.”
The 2017 audit also showed a slight improvement in reserve funds that are available for spending. At the end of 2016, that amount was $1.3 million and at the end of 2017, the audit shows that number at $1.7 million.
Erb described $1.7 million as an “extremely thin” reserve for the county’s $64.4 million budget.
But when the 2018 audit is prepared, Erb said he expects to see numbers indicating that the revenue was sufficient to cover expenditures without the need to use reserve funds to balance the budget.
“What we’re trying to do is make the county’s fiscal position stronger,” Erb said.
Finance Director Jennifer Sleppy said her review of the 2017 audit indicated that while the 2017 budget called for using $3.9 million in reserve funds, it needed only $2.4 million to cover expenses. That helped create the $1.7 million, she said, referring to the reserve funds available for spending.
As of May, she said the county’s 2018 revenue seems to be coming in as budgeted and the expenditures are a little under budget. Sleppy said she will be working on a review of the county’s financial picture for the first half of 2018. It is scheduled to be ready for presentation at the commissioners’ July 31 meeting, she said.
Mirror Staff Writer Kay Stephens is at 946-7456.