By Mike Tomlinson
A critical issue facing voters, in this year’s election for city controller, is the Philadelphia pension plan.
A critical perspective on the Philadelphia pension plan crisis is needed. The mayor, City Council, city controller and pension board are clearly misleading residents and city workers. The truth about the severity of the pension plan crisis is hidden behind false information and unrealistic expectations. It’s a total and complete lack of transparency.
The Philadelphia pension plan is a mismanaged disaster. The current value of city employees’ fully earned pension is $11.7 billion.
The city’s pension fund balance (money in the bank) is only $4.4 billion. The best description of this $7.3 billion deficit is that if every person covered by the pension plan requested their benefits. they would get only 37 cents on the dollar.
Last year, typical pension plans earned an average of about 5 percent on their money. Last year, the Philadelphia pension plan lost 3.7 percent, or $149 million, of city retirees’ money. This is complete mismanagement. More importantly, this is a clear sign of fraud, corruption and/or other funny business with the taxpayers’ money. If the city pension fund assets had earned even just the low end of a typical pension plan, then it would have earned $198 million. That is a $347 million mismanagement of funds that should be explained and investigated in detail. But instead of investigation, we have cover-up.
The city controller, an elected office for which I am running, is a mandated member of the Philadelphia Board of Pensions. The pension fund and all related pension processes must be audited. It is the responsibility of the city controller to perform this audit. This is one of the two most imminent major problems facing the city of Philadelphia. A pension liability obligation of $11.7 billion and Investments of only $4.4 billion, not audited.
A final fact must be noted. Given last year’s mismanaged performance of losing 3.7 percent of retirees’ money, the Board of Pensions is representing, to all necessary interests, that it has an expected investment return, on fund assets, of 7.7 percent per year. It just lost 3.7 percent. And now, it is misrepresenting future investment returns to hide the full truth about the impact of the pension crisis.
As city controller, I will audit every aspect of the Philadelphia pension plan process, including:
• Validating the accuracy and reliability of the employee data that supports the pension liability. I believe the liability (money owed to pension plan members) is understated.
• Reviewing all investment consulting contracts for appropriateness, service, fair price and results.
• Assessing the viability and true value of the current investments.
• Reviewing all contracts and the process relating to the security, custody and investment of fund assets.
• Tracking the fund deposits for accuracy to ensure funds are fully deposited and not stolen.
• Assessing the overall operational process.
• Providing the residents of this city and city workers an honest assessment of the pension plan.
The pension fund not having a routine comprehensive audit is city management incompetence and a lack of transparency to the people. ••
Mike Tomlinson is the Republican nominee for city controller.