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<p>Instead of wrestling with another increase in next year&#8217;s budget, Luzerne County government will close a $91.8 million employee pension fund shortfall over 18 years instead of 15.</p><p>County Manager C. David Pedri urged his county Retirement Board colleagues to unanimously approve the change Wednesday, saying he doesn&#8217;t want to continue asking taxpayers to shoulder the burden of increased pension fund subsidies.</p><p>Most of the 14 percent in county tax increases imposed since 2012 &#8212; 9 percent &#8212; covered rising pension contributions, he said.</p><p>Under the 15-year plan, next year&#8217;s subsidy was estimated to increase from $13 million to $13.6 million and rise to around $14.1 million from 2020 through 2022.</p><p>By stretching out the schedule another three years, next year&#8217;s payment should be $12.9 million and hover around $13.4 million the following three years, according to a chart prepared by actuary Greg Stump, of Boomershine Consulting Group LLC.</p><p>Comparing the scenario to a mortgage, board Chairman Eugene Kelleher, a county councilman, said a shorter repayment window may be more beneficial, but he questioned if a county council majority would be willing to consider a tax hike for an increased pension subsidy.</p><p>&#8220;That&#8217;s the variable we have to deal with here,&#8221; Kelleher said.</p><p>Using the mortgage example, Pedri said a longer repayment period would make sense if a home buyer also is saddled with credit card debt.</p><p>The county is in such a situation due to inherited debt, Pedri said. The county must pay $24.9 million toward debt next year, $26.1 million in 2020 and around $26.1 million annually from 2020 through 2028. The final debt repayment is $11.1 million in 2029, and Pedri said the only new borrowing since the 2012 switch to home rule was $7.9 million for an energy savings project.</p><p>Pedri initially had proposed a 20-year pension fund repayment but said he would agree to 18 years to &#8220;take the middle road.&#8221;</p><p>Councilman Chris Perry, Budget/Finance Division Head Brian Swetz and employee representative John Evanchick Jr. also sit on the board.</p><p>Investment adviser Richard J. Hazzouri, of Morgan Stanley, told the board he will continue pushing to hit a 7 percent investment return target in the challenging market without exposing the fund to excessive risk.</p><p>As of June 30, the fund was valued at $237.3 million, with a year-to-date return of minus 1.09 percent.</p><p>The investment mix is currently 38.6 percent bonds, 48.6 percent stocks and 11.3 percent alternative, with the remaining 1.5 percent held as cash.</p><p>Morgan Stanley plans to increase investments in hedge funds and other alternative options while decreasing the amount parked in bonds, Hazzouri said.</p><p>The county&#8217;s pension is currently 73 percent funded. Subsidies at $13 million and higher are projected to linger through 2035, Stump&#8217;s report shows.</p><p>Shoring up is necessary to close a shortfall that emerged years ago, when investment earnings and employee contributions stopped keeping pace with obligations for future pensions that are guaranteed by law. Two other drivers cited by Stump: People are living longer, and the revenue projected from investments had been unrealistically high.</p><style>
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<div class="neCaption">Pedri </div></div><div class="metaInfo"><photo0>https://www.timesleader.com/wp-content/uploads/2018/07/web1_DavePedri.jpg</photo0><caption0>Pedri </caption0><photoCredit0></photoCredit0></div></div>
<div class="metaInfo"><bylineMeta><p>By Jennifer Learn-Andes</p><p>jandes@www.timesleader.com</p></bylineMeta></div><div class="metaInfo"><shirttailMeta><p>Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.</p></shirttailMeta></div>

Luzerne County pension subsidy hike averted with longer repayment schedule