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Altoona must pay a total of about $7.7 million toward its three employee pension funds for next year, according to annual Minimum Municipal Obligation calculations made recently by city Finance Director Jim Gehret.
The calculations follow a formula set by the state's Act 205 of 1984 and meant to ensure municipal pension plans are sufficiently funded, according to an online source.
The components of the formula include a "normal cost" for the coming year for each fund -- comprising the estimated ultimate costs of retirement benefits earned by the workers covered by the fund, according to an online source.
The normal cost is expressed as a percentage of the fund's overall payroll, reflecting actuarial factors recalculated every other year -- including the likely remaining years of work for the fund's employees, their likely earnings during those remaining years and their life expectancy after retirement, along with overall inflation and expected investment earnings for the fund, according to online sources.
The formula also includes an amount designed to make up any existing shortfall in the fund, in amounts designed to amortize or reduce such shortfalls over a 10-year span, according to online sources.
And it includes administrative expenses, while also taking into account employee contributions, according to a worksheet included in a packet presented Monday at a City Council meeting at which the MMO numbers were approved.
The city will need to pay $3.6 million toward the firefighters fund; $2.9 million toward the police pension fund; and $1 million toward the non-uniformed workers fund, according to the worksheet.
The firefighters plan is 73% funded; the police plan is 82% funded; and the non-uniformed workers plan is 92% funded, according to Gehret.
Based on state Act 205, the firefighters and police plans are minimally distressed, while the non-uniformed workers plan is not distressed, according to online sources.
Municipal governing bodies must approve their MMO calculations by the end of September of the year preceding the one for which the MMO must be paid.
Municipalities must pay their MMOs by the end of the year, according to Gehret.
The city will cover the MMO cost through an as-yet undetermined contribution from the state; and through money collected from its 0.4 percent earned income pension surtax, which is applied to both Altoona residents and residents of other municipalities who work in the city.
Any additional amount is covered by general fund money.
The state contribution comes from a 2% gross tax on premiums charged to state residents by insurance companies headquartered outside Pennsylvania for coverage of injury, damage, or accidents, according to online sources.
Mirror Staff Writer William Kibler is at 814-949-7038.