A few weeks ago Clairton became the second Pennsylvania city to leave the Act 47 program for distressed municipalities. Nanticoke was the first city to leave earlier this year.
Instrumental in both Clairton and Nanticoke's success was the cities' ability to renegotiate employee contracts and reform their broken pension systems.
Passed in 1987, municipalities with an Act 47 designation struggle to reconcile declining working populations with burgeoning pension costs and debt. To date, 12 cities are designated as distressed.
Cities across the commonwealth are trapped in broken pension plans, putting their finances in a percarious position. Legislation before the State Senate, HB 414, would provide these places with relief by reforming pensions for new hires. Cities could choose between defined-benefit and cash balance plans, while current employees and retirees will retain their benefits.
Like Pennsylvania's cities, rising pension payments are squeezing the budgets of school districts, and the state, which has approximately $53 billion in unfunded liabilities.
Good pension reform is one of the keys to revitalizing not just cities like Clairton but the entire state of Pennsylvania.