Washington County taxpayers again contributing to employee pensions

June 14, 2013
Washington County's Courthouse Square office building

Taxpayers’ contribution in 2014 to the county employees’ pension fund will be $4,059,517, up from $3.5 million this year and $3.7 million the year before.

Washington County officials were notified of the contribution this week in a 30-page report prepared by the Hay Group of Philadelphia.

About $1,873,900 of the annual retirement contribution is either reimbursable through state or federal grants or paid from a fund that sustains itself through its operations, leaving roughly $2,185,617 to be paid from county property tax dollars, according to Joshua Hatfield, Washington County deputy controller.

The pension contribution equals a little more than one mill from a property owner’s tax bill from Washington County, where a single mill generates $1.5 million in tax revenue. Total millage in Washington County is 24.9 mills.

“We’re required by law to provide a defined-benefit plan,” said commission Chairman Larry Maggi. “Until Harrisburg changes that defined-benefit plan, we will have to abide by the law and continue with that. Our investments came in at 13 percent, but we’re still carrying that 2008 year which causes our contributions to go up.”

Washington County’s portfolio experienced a precipitous drop of 25 percent in 2008 as the housing bubble burst and sent markets into a tailspin. The commissioners adopted a tax increase for 2010, the second of this century.

“We’re required by law to make that payment,” he continued. “We are lobbying Harrisburg to make some changes. The taxpayers are footing this bill, and most of them have to worry about their own pensions.”

The County Pension Law, Act 96 of 1971, governs the establishment and operation of a retirement system for employees in each of the state’s 67 counties.

The county expects to earn at least 7.5 percent on its pension investments annually, although there has been some talk of dropping that target to a slightly lower figure.

Washington County has 1,100 employees who contribute 7 percent of their earnings to their pension plans. Its funded ratio is 82.7 percent. Any number above 80 is considered highly acceptable.

The county’s pension plan was created Jan. 1, 1946, and it has 601 retired employees and beneficiaries. The size of the pension plan as of Dec. 31, 2012, is $120,265,836. The county’s investments for the last five months have been increasing at a rate that has pleased the retirement board, which is composed of the county commissioners, controller and treasurer, and its consultants.

The vast majority of Washington County retirees are making less than $40,000 in annual pensions.

Barbara S. Miller covers politics, Washington County government and a variety of other topics for the Observer-Reporter. She is a graduate of Washington & Jefferson College, majoring in English and history. Follow her on Twitter @reporterbarb.

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