Several Pennsylvania Government Pension Plans to Receive State Aid

October 7, 2011 ( - Pennsylvania Auditor General Jack Wagner said 87% of the state's 1,488 municipalities receiving state aid for their pension plans covering fire, police, and non-uniformed personnel will receive a one-time funding increase this year.

The increase is because of the commonwealth’s stepped-up effort to collect a 2% tax on out-of-state companies that sold casualty insurance policies to Pennsylvania residents.

Wagner said the state will disburse an additional $132,615,954 in pension aid this year, an increase of 61% over a year ago. In total, the Department of Auditor General will disburse $350,526,203 in state aid this year, compared with $217,910,249 in 2010.

Wagner cautioned this was a one-time windfall and said that not every municipality would receive an additional 61%. Each municipality’s total pension allotment is determined by a number of individual factors, such as retirements or workforce reductions in each plan.

With many Pennsylvania communities still grappling with the effects of a weak economy, Wagner said, there may be great temptation to use this additional state revenue to plug budget gaps. However, state law prohibits the use of the funds for any purpose other than to defray municipal pension costs.

“This one-time funding increase is a great opportunity for municipalities to better ensure the long-term financial stability of their pension funds,” Wagner said, in a press release. “However, I strongly caution against using this additional one-time increase as justification for providing increased pension benefits to plan members or for planning future budgets.”