More than $427 million in state aid is being distributed to municipal pension plans across Pennsylvania.

Auditor General Timothy DeFoor announced that 1,441 municipalities and regional departments received a total of $427,788,682 to support retirement plans for police officers, paid firefighters and non-uniformed municipal employees.

DeFoor said the funding helps municipalities meet their retirement obligations to former employees while easing the burden on local taxpayers.

This year’s allocation also includes the first cost-of-living adjustment for municipal police officers and firefighters since 2002.

The state aid is funded through a two-percent tax on fire and casualty insurance policies sold in Pennsylvania by out-of-state companies. The amount available for distribution varies from year to year.

Municipal pension plans receiving state assistance are subject to audits by the Department of the Auditor General to ensure the money is used in accordance with state law.

The largest share of this year’s funding, approximately $181.9 million, went to the Southeast and Greater Philadelphia region. The Susquehanna Valley received approximately $65.3 million, while the Northeast received approximately $29.4 million.

Municipalities can review their individual pension aid allocations by county through the Pennsylvania Department of the Auditor General’s website.

Pat Ryan of News Talk 103.7FM pointed out, “So you pay taxes, or they take a slice out of this fee that you’re paying to these fire and casualty folks, and then we’re going to repurpose $427 million to try to keep some of these pension programs solvent. If I’m looking at Social Security, you guys want to put a haircut on that in 2035? If it didn’t last that long, how about we take a little bit of that money and plug that over there? It seems a little bit unfair to those folks that are facing, I’ve got to pay my social security. I’ve got to pay this fee, which is being tapped to me from out of state. Or fine, all right. I’m getting a lot of state people getting policies here. Somebody’s paying, and I think you’ve got a room to put some of that money into Social Security.”

 

Attorney Clint Barkdoll said, “This is a 2% tax on fire and casualty insurance policies sold in Pennsylvania that create this money and this is a big number.”

 

The COLA in this year’s allocation is also a big deal.

 

Barkdoll said, “That’s of course adding to these costs, but over 1400 municipalities will get this. Some locally, of course, will come into this money too. But the irony of it is what you’re touching on: Social Security is insolvent. PSERS, the SERS plans, they’re way underfunded. But yet, here’s this real windfall that’s going to come into these municipalities.”

 

Ryan added, “And if we’re short in Pennsylvania, then the taxpayers are on the hook to fill that void.”

 

Michele Jansen of News Talk 103.7FM noted, “The fact that the state is doing this and it’s been done, this isn’t the first time they’ve given additional funds for the municipal pensions. But see, I’ve heard the argument before. Well, the municipal pensions are different, that we have to mine those carefully and make sure that we’re responsibly taking care of them because it’s not the same as PSERS or SERS. Well, in a way, it is, isn’t it? If the state is reaching over and taking fees and taxes that guess what? Ultimately come out of all the taxpayers’ pockets to shore up the municipal pensions, well, then really aren’t the taxpayers basically on the hook to make sure? And yes, I get it, and we’ll always hear this: our firemen and our policemen, are doing this fantastic job, don’t they deserve to have a sure pension? But we are a state that’s going broke, and there’s going to be growing resentment from those who don’t get a government pension towards those who do, and remember, most of these people also get social security. So this is not a good sign that we have to go and find extra money to shore up municipal pensions, is it?”

 

Barkdoll said, “It’s public money ultimately. And in theory, these municipal pensions are backstopped by local government, local taxpayers. But if they’re insolvent, then you have these scenarios where the state government is still going to step in to provide a safety net. So any way you cut it, it’s taxpayers.”