LAWRENCE COUNTY Commissioners are skeptical about Felasco's savings plan

Future earnings on retirement investments will repay the loan, Felasco said.
By LAURE CIOFFI
VINDICATOR NEW CASTLE BUREAU
NEW CASTLE, Pa. -- Lawrence County Treasurer Gary Felasco believes he can save the county general fund about $700,000 over the next two years.
But county commissioners are skeptical about the idea, which requires they take out a $2.4 million loan through the sale of bonds.
Commissioners have asked Felasco to bring in a money management consultant to talk about the idea.
Felasco told commissioners at a retirement board caucus meeting Thursday that a change in state law allows commissioners to increase pensions for future retirees. Retirees now get about one-third of a paycheck they received in their highest three years of earnings when they retired.
The change would give future retirees more than half of a paycheck that they would receive in their highest three years of earnings.
But that means commissioners would have to immediately add about $1.7 million to the fund to cover the unfunded liability -- or the amount needed to cover everyone if they retired at once.
What's owed
The county already owes $362,717 in unfunded liability for the current year due Dec. 31. That money is in the county's general fund. He noted that a similar payment is expected next year.
He said by taking out a loan, the payback would come out of the county's debt service millage, not the general fund millage. Felasco refused to say if a tax increase would be necessary to pay back the money.
The treasurer contends, however, if the retirement fund investments do well enough, that money could be used to repay the loan in future years. He said in the past 30 years retirement fund investments have made more money than expected.
"It's a creative way to refinance $700,000. It becomes a liability of the pension fund, not the general fund," Felasco said.
The county and employees would each be required to contribute 9 percent, instead of the current 8 percent, to the pension fund under this new plan.
Felasco said state law says the county must decide by Dec. 16 if the change will be made.
Commissioners Ed Fosnaught and Steve Craig said they felt uncomfortable borrowing money for the county pension fund. Commissioner Dan Vogler was not present.
cioffi@vindy.com