By Kim Jarrett
(The Center Square) – More than 60 Pennsylvania municipalities have pension plans that are moderately or severely underfunded, but Auditor General Timothy DeFoor has a warning for local officials eying relief money as a solution – funds from American Rescue Plan cannot be used to make up the shortfall.
“Pennsylvania did not win the lottery when it comes to the American Rescue Plan,” DeFoor said at a news conference Tuesday. “In fact, one of the provisions of the American Rescue Plan law clearly states that these relief funds cannot be used to pay off past due pension debt.”
Five municipalities have pension plans classified as severely underfunded, meaning they have less than 50% of the money needed to meet their obligations, DeFoor said.
“Another 58 municipalities have pension plans that are moderately distressed,” DeFoor said. “This means they have less than 70% of the money they need to pay future pensions.”
DeFoor said audit reports from Chester show the municipality is $34 million short. The city does not have enough money to fund the police pensions for more than five months, according to Michael Doweary, Receiver for the city of Chester.
Pennsylvania received $7.29 billion from the American Rescue Plan and local governments received $6.2 billion.
The restrictions on how local and state officials may spend pandemic relief money have proved controversial, with some Republican lawmakers across the nation arguing that it would be appropriate to provide tax breaks.
