New Castle News


July 12, 2014

While state stalls, local governments solve pension mess

CNHI — While the state Legislature has been unable to shift away from the defined-benefit pension style that is creating a crippling unfunded liability, small rural governments have quietly been adopting pension plans that don’t carry the same risks.

A new study by the Center for Rural Pennsylvania found that four in 10 rural townships and boroughs use 401(k)-style pensions for their employees. And most of those plans are in no financial difficulty at all.

In contrast, the city pensions and the state-run pensions for state government employees and public school employees are teetering under the weight of future costs that far outstrip what they will have in the bank.

The pensions for state employees and public school employees are burdened by a combined $50 billion unfunded liability.

Gov. Tom Corbett has endorsed plans to shift future public school and state government workers into 401(k)-style plans.

Despite repeated pleading from the governor, the Legislature recessed for the summer without taking any major action on pension reform.

The House failed to pass any legislation; the Senate passed a bill that would move elected officials — including lawmakers and the governor — into 401(k)-style plans, while not forcing other government employees to follow suit.

In 401(k)-style plans, most common in the private sector, the employer and employee both contribute, but the pension benefit is determined by how much is in the employee’s account at retirement.

Under the defined-benefit approaches used by both the State Employee Retirement System and the Public School Employees Retirement System, the employee’s pension payments are guaranteed, based on a calculation that includes years of service and the average salary of the worker at the end of his or her career.

Corbett has become so frustrated by the General Assembly’s failure to act on pension reform that on Thursday, he used his line-item veto powers to cut $65 million from the Legislature’s budget and axed more than $7 million in earmarks tucked into the budget.

That included $5 million the Legislature had agreed to pay for parking around the Capitol.

“They are a full-time Legislature,” Corbett told reporters Thursday. “They need to return and enact meaningful pension reform.

Corbett noted that about one-third of Pennsylvania school districts this year asked the state for permission to raise taxes above the rate of inflation in order to cover pension costs.

In Lawrence County, both Ellwood City and Wilmington did so.

At the same time, local townships and boroughs with pensions have avoided the crisis.

“Using 2011 data, only 27 of the 3,207 municipal plans across the Commonwealth were classified as “severely distressed,” said Courtney Accurti, a spokeswoman with the Pennsylvania State Association of Boroughs.

“A very significant majority of local governments across Pennsylvania are out-performing state consolidated systems due to local use of defined contribution plans and prudent investment oversight.”

Accurti said that more local governments are looking to make the switch away from defined-benefit plans.

Even more local public pensions would be 401(k)-style plans if the state allowed it, said Elam Herr, assistant executive director of the Pennsylvania State Association of Township Supervisors.

Under current law, police and firefighters must be provided the same sort of defined-benefit pensions used for state workers.

Herr said his organization has lobbied for the freedom to make changes to the police and firefighter pensions.


Text Only | Photo Reprints
  • CRESTVIEW.jpg Outreach: Churches plan to host picnic for residents of Crestview Gardens

    Volunteers from several area churches are banding together in hopes of bringing peace to a troubled neighborhood.

    July 28, 2014 1 Photo

  • money.jpg Council OKs funds to remove dead trees

    New Castle City Council has approved spending funds from its contingency account to remove some trees at Darlington Park. Marshall Tree Experts of Ellwood City has given an estimate of $12,000 to remove the large elm trees from the Mahoningtown park.


    July 26, 2014 1 Photo

  • 12.jpg Photo Gallery, Story: Night light

    The balloons may have been on the ground but spirits were soaring.


    July 25, 2014 1 Photo 1 Slideshow

  • StateFair.jpg 'State Fair' coming to Playhouse

    The fair is coming to town. No, not the Lawrence County Fair, although that is right around the corner. This is the Iowa State Fair, and it will be live on the stage of the New Castle Playhouse for three weeks, starting Friday night.

    July 24, 2014 1 Photo

  • accountant.jpg DeLorenzo’s status with authority unchanged

    Deno DeLorenzo’s status as a contract employee with the New Castle Sanitation Authority remains unchanged. Authority board members met with DeLorenzo last week regarding an investigation by the Lawrence County district attorney’s office involving Shenango Township funds.

    July 23, 2014 1 Photo

  • Shooting.jpg Detroit area man dies in Ellwood City gunfire

    A triple shooting in an Ellwood City street has claimed the life of a Detroit area man. Gunfire erupted in the middle of Loop Street outside the Walnut Ridge housing project around 10:20 p.m. Sunday, according to state police.

    July 22, 2014 1 Photo

  • Baptism1.jpg Dipped downtown

    John the Baptist identified himself as “the voice of one crying in the wilderness, ‘Make straight the way of the Lord.’ ” On Saturday, local evangelist Randy Crum once again took a cue from the son of Elizabeth and Zechariah, eschewing the locusts and honey that John was known to munch on but heading out into the wilds to baptize believers and challenge them to share their faith with their community.

    July 21, 2014 3 Photos

  • lamancusa.jpg Tanner, district attorney: No comment

    The Lawrence County District Attorney is keeping mum about a probe into finances in Shenango Township. “We don’t talk about ongoing investigations,” Lamancusa said Friday.

    July 19, 2014 1 Photo 5 Stories

  • Shenango1.jpg Shenango Township: Supervisors fire Tanner, release DeLorenzo

    The Shenango supervisors fired township secretary/treasurer Brian Tanner and terminated auditor and consultant Deno DeLorenzo last night.

    July 18, 2014 3 Photos 4 Stories

  • gavel.jpg Shenango to take action on Tanner, DeLorenzo

    Shenango’s supervisors will act Thursday night on the employment contracts of two men being investigated for possible theft of township funds.

    July 17, 2014 1 Photo 4 Stories

House Ads

The Steelers opened training camp this weekend. How do you see them faring this season?

Super Bowl
Division champs
Wild card team
Missing playoffs for a third straight year
     View Results