York, Pa., and the Fraternal Order of Police saved nearly $10 million in projected pension costs, avoided devastating layoffs of public safety employees and helped stabilize its pension fund, Pennsylvania Auditor General Eugene DePasquale said in an audit.
The city and the police union agreed to set an annual cost-of-living adjustment at 2.5%, saving the city an estimated $9.4 million in contributions to the plan for 2015 and 2016. The amended cost-of-living compromise was retroactive to Jan. 1, 2013.
The police union also agreed to increase the retirement age from 50 to 55 years, starting with police officers hired after Jan. 1, 2015. This benefit modification will reduce the plan's long-term costs since the affected police officers will not start receiving pension benefits for an additional five years.
"Everyone wins when city leaders, union leaders, police and retirees work together," DePasquale told reporters in York, a 44,000-population city 25 miles southeast of Harrisburg. "This approach is rare and innovative. In fact, it may be a road map for other municipalities and unions to address the long-term financial stability of their pension plans to ensure funds are available for future retirees.
"Here in York, annual pension payments were made on time for the first time in two years, avoiding costly penalties and helping to avoid the potential layoff of up to 40 police officers. The result is that taxpayers were spared cuts in services or a devastating tax hike," DePasquale said.
In March 2015, DePasquale said the city owed more than $4.13 million to its employee pension funds for missed payments for 2013 and 2014. Both DePasquale and Mayor Kim Bracey have called for pension overhaul at the state level.