May 21, 2015 3 min read

Washington County’s actuary calculated taxpayer contributions to county employees’ pension fund at $4.3 million for this year, down a half-million dollars from an earlier estimate that was used last fall as the 2015 budget was being prepared, but still a record amount.

The previous peak was $4,059,517 in 2013.

The reduced total for 2015 was due to pension fund investments performing well last year. Of the total, $2,511,957, or about 58 percent, is directly borne by county taxpayers. The rest, for a pool of workers including Children and Youth Services and Aging Services, is reimbursed by state and federal tax dollars.

Calculating the figure, now known as actuarially determined contribution, was the Hay Group, the county’s consultant in Philadelphia. It was previously known as the “annual required contribution.”

According to state law passed in 1971, counties in Pennsylvania must have a defined benefit retirement plan for workers’ pensions. County employees have 7 percent of their salaries withheld from their paychecks as a pension contribution. The vast majority of Washington County retirees are making less than $40,000 in annual pensions.

The Washington County Retirement Board, comprised of the county commissioners, Treasurer Francis King and Controller Michael Namie, lowered its earnings target to 7 percent beginning Jan. 1. The figure, known as the assumed rate of return, had been 7.5 percent.

Commission Vice Chairman Diana Irey Vaughan said Wednesday the figure is “the ratio of funding to make sure it is a sound plan. When you overestimate your return, you’re going to have a greater liability if you don’t hit that benchmark. One of the reasons we have a Double A bond rating, one component of it, is a sound pension fund.”

The retirement board met Thursday and one of the reports from investment management consultant Pierce Park Group was an article headlined, “Public Pensions a Hot Topic in Pennsylvania.” The summary noted Gov. Tom Wolf “has indicated that he intends to weigh in on Pennsylvania municipal pension funding issues ‘soon.’ Meanwhile, over at the General Assembly, in late April, the House of Representatives unanimously passed Bill No. 239, which amends” Act 96, which deals with county pension systems. The bill defines a cost-of-living index and revises how it would be calculated. Only county plans with an 80 percent or better funded level could approve a cost-of-living adjustment.

The bill was referred to the state Senate for consideration.

Washington County has not given a cost-of-living increase to its retirees since 1998, and the House bill is not sweeping municipal pension reform that counties and other governments have been seeking.

“I brought that question up at the Chamber (of Commerce) breakfast. I asked, ‘Are you going to change our actuarially required contribution to a defined contribution plan?’ of several members of Washington County’s legislation,” Irey Vaughan said.

“The private sector long ago went away from defined benefit plans to defined contribution plans,” she said. “Legally, you cannot make a change for your current employees. It would only be changed for future hires. It’s anybody’s guess what the Legislature is going to do.”

As of Monday, the Washington County pension investment portfolio was valued at $147,851,266. The plan has 1,784 members, including 670 retirees and 56 people who are entitled to benefits but are not yet receiving them.

Also Thursday, the retirement board restored its secretary’s compensation to $2,400. Several decades ago, the board slashed the secretary’s pay to $240, where it has remained. As in most counties, the controller is the retirement board secretary. Namie was absent Thursday, and Deputy Controller Joshua Hatfield abstained from voting on the matter.