The City of Scranton could be bankrupt in less than five years, according to a new report from the Pennsylvania Auditor General’s office.
The City of Scranton could be bankrupt in less than five years, according to a new report from the Pennsylvania Auditor General’s office. If no action is taken, Scranton will run out of money to pay its municipal employee pensions during that period, the audit report says.
Scranton’s annual pension obligations have almost tripled, from $3.3 million in 2008 to $9.3 million in 2013. The report says the city will run out of money to pay firefighter and non-uniformed employee pensions in less than three years. Its police pension fund will be dry in less than five years.
The situation in Scranton “is bad and getting worse,” said Auditor General Eugene DePasquale. “This problem is going to get confronted sooner rather than later, and the longer it waits the more expensive it’s going to be.”
DePasquale said Scranton is one of many Pennsylvania cities with underfunded pension plans. In a report earlier this year, the Auditor General’s office found that nearly 600 cities and towns in Pa. have pension plans that are more than 10 percent underfunded. Philadelphia, Pittsburgh, Hazleton, and Allentown were among those cities.
“This is a statewide problem that really needs to get much more attention,” DePasquale said. “I believe it’s going to [require] the governor and the legislature to come up with a statewide solution.
In the statewide report, the Auditor General’s office makes a dozen recommendations for how the state can help cities fix their pension problems. The report suggests that the state require municipalities to publish their annual pension costs, and update their plans’ age and service requirements to account for the fact that people are living longer.