Gov. Wolf kills Pa. pension watchdog (Updates)

THURS. UPDATE: Auditor General Eugene DePasquale says his agency can take over PERC's job reviewing municipal pension plans after Gov. Tom Wolf defunded the agency, calling its work "redundant" with that of pension plan auditors and other agencies. PERC exec. dir. Jim McAneny said the auditor's office is better suited than the pension agencies Wolf's office wanted to do the work. No immediate comment from Wolf's office.  Read more here.

LATE WED. UPDATE: Gov. Wolf's termination of PERC, Pennsylvania's independent state and local pension review agency, "is a mess. It makes me nervous," auditor general Eugene DePasquale told me. "If there's a better way to do this than PERC, we're all ears. But we can't just let this fall apart." He says he's been fielding calls from legislators in both parties concerned about Wolf's action, and hopes to have an alternate plan as early as tomorrow. "If this thing isn't fixed by late March we have a problem." See also GOP lawmakers' proposal for PERC, at UPDATE below.

EARLIER:  Pennsylvania Gov. Tom Wolf has cut off funding for the Public Employee Retirement Commission, effective Feb. 12. That's six weeks before biannual reports from the state's 3,200 city, township, borough, police, fire and local authority pensions used to portion $250 million-plus in yearly state subsidy for local pension funds are due in PERC's Harrisburg offices. The Auditor General's office uses those reports to audit the pensions and ensure towns are raising enough money to pay retirees what they promised.

"We do believe that PERC is redundant and unnecessary and is an expense that the Commonwealth does not need," Wolf spokesman Jeff Sheridan told me. The State Employees' Retirement System and the Public School Employees Retirement System "have their own independent actuaries that perform analysis and will continue to do that," he added. "We believe the Pennsylvania Muncipal Retirement System can carry out the functions related to municipal (pension) systems. The details are currently being worked out."

PERC was set up in 1981 to meet "the need for a totally independent review of these public employee matters," including proposals to incrase or change pensions and eligibility, Anthony Salamone, a member of the commission's board of directors and a retired PERC executive director, told me. "There are literally scores of laws affecting each type of employee and each type of municipality. No one else reviews those, and no one else puts a cost figure" on legislative proposals, including the several competing plans for reducing local pension costs now circulating the General Assembly, Salamone added.

Salamone questioned Wolf's plans to put the Municipal Retirement System in charge of calculating how much money its members get and whether they are contributing enough local funds to pay pensions. "Those member communities get state aid. They can't possibly regulate themselves. They can't make the distribution of money to themselves. They are administrators, not a regulatory agency. Would you close the state Insurance Department and allow insurance companies to regulate insurance?" Salamone asked. At least "you would need to change the laws" that require the agencies to do their jobs.

PERC executive director James L. McAneny told me he is "trying my best to salvage the municipal pension system state aid program, and get the other three people in this office into other jobs. There's going to be hell to pay if the State aid checks get out to the towns late, wrong or not at all."

Nathan Benefield, policy vice president for the conservative Commonwealth Foundation, in a statement called it "astounding that Gov. Wolf would target the independent agency that counts pension costs for legislators and taxpayers." The foundation, which opposes Wolf's attempts to increase public-school funding without cutting other programs, says Wolf has acted high-handedly in trying to oust McAneny and curtail independent review of state and local retirement spending.

UPDATE: Statement passed along by Gina DiOrio of Commonwealth: – "State Reps. Keith Greiner (R-Lancaster), Seth Grove (R-York) and Stephen Bloom (R-Cumberland) today responded to the news of Gov. Tom Wolf's unilateral move to shut down the Public Employees Retirement Commission (PERC):

"PERC has two primary responsibilities, to review and provide actuarial notes for all proposed pension reform legislation and to review Pennsylvania's municipal pension plans and certify this information to the Auditor General's office for the distribution of municipal pension aid...

"Gov. Tom Wolf's unilateral move to stop the work of PERC is extremely troubling... PERC has performed its duties for over 30 years. Why shut down PERC now when meaningful statewide and municipal pension reforms are being considered by the General Assembly?...

"When the governor cut PERC's $914,000 appropriation, he created a $250 million problem. This is the amount of statewide funding that Pennsylvania's municipalities received in pension aid from Act 205 in 2013.... PERC is required to certify municipal pension data that is used to drive out the state aid from Act 205, which represents over 20 percent of the total contributions to municipal pension plans...

"If PERC will not be completing its statutory duties that drive out Act 205 funding, who will? And with what funding? The General Assembly needs to address Wolf's self-made crisis and prevent it from impacting our taxpaying constituents. We are open to discussions on whether or not PERC is the most appropriate body to complete these tasks, but that discussion must be had in the future. The General Assembly must act to restore funding to PERC which Wolf vetoed, to ensure Act 205 funding is driven out.

"Greiner and Grove are prime sponsors of House Bill 316, comprehensive municipal pension reform legislation, and are co-sponsors of House Bill 1793."