SCRANTON PENSION FUND MAKES PROGRESS, AUDIT FINDS

An audit of Scranton's public pension plans shows the city has made significant progress in recent years, but officials still have a funding gap to narrow.

By December 2021, police and non-uniformed pension plans approached an 80% funded ratio of assets to liabilities, but the firemen's pension still lagged, according to the audit. Overall, the combined pension fund is 66% funded, placing Scranton in moderate distress.

“We remain concerned regarding the long-term financial stability of the city's pension fund,” the audit report noted.

However, the city's pension funds have improved from the recent past. In 2017, the funding ratio was only 37%, putting the city in severe distress. The city is now just shy of the 70% funding level that would qualify it as minimally distressed.

“The department acknowledges the city's continued efforts to address the city's distressed status, and we encourage city officials to continue their efforts in the development and implementation of a long-term strategic plan to ensure the long-term financial stability of its pension fund,” the report noted.

The biggest improvement came within the non-uniformed pension plan: from a funded ratio of 37% in 2017, the city improved to 77.6% in 2021. The plan has 116 active members, 137 retired members, and six terminated members eligible for future benefits.

The police pension has also significantly improved: from a funded ratio of 48.6% in 2017 to 77.5% in 2021. The plan has 144 active members, 182 retired members, and one terminated member eligible for future benefits.

Where the city still lags is in the firemen's pension plan. In 2017, the plan had a funding ratio of only 26.8%. It is now much improved, at 54.4%, but is only slightly above the definition of severe distress, defined as a less than 50% funding ratio. The plan has 135 active members, 205 retired members, and no terminated members eligible for benefits.

Since 2017, the city has sold its assets in the Scranton Sewer Authority and transferred almost $23 million of the proceeds to its pension funds, and also hired an investment advisor “to oversee the tactical and strategic allocation of pension fund investments,” the report noted, along with other independent pension specialists.

In 2022, the city was declared no longer in financial distress and exited Act 47, a state designation added when cities were in “severe financial difficulties.” Scranton entered Act 47 in 1992.