Quickly right now I simply have to share with you my favorite exchange from yesterday’s meeting. I’m not trying to embarrass anyone with this selection, and I don’t think that I am. It’s just my favorite for so many reasons. It works as a very belated closing argument, or as Jerry Springer’s Final Thought, or on so many other levels.
We join Councilman Bruce Kraus’s second round of questions; he has arrayed before him Controller Michael Lamb, council Budget Director Bill Urbanic, city Finance Director Scott Kunka and city Assistant Finance Director Cathy Qureshi. Kraus and Kunka have been jawboning at each other, as you do…
Kraus: And Ms. Qureshi’s chomping at the bit here, and I don’t mean to be disrespectful of you — we should have included you from the beginning. Because I value your opinion and you’re here for a reason. And I’m going to formulate an opinion based on the four different versions that I’m hearing here today. But I damn well guarantee you my decisions going to be based on making sure our obligations are met to our pensioners, and we are going to meet those obligations. That is the sole focus of this conversation. That’s what we’re going to accomplish here today. No matter what. However, in terms of parking and pensions being tied together — I didn’t offer that up from day one. That clearly was the will of the Mayor’s office. That was the wishes, that these be co-joined.
Kunka: That was something completely different though.
Kraus: Okay, but — and clearly that’s where we are six, eight, 10 months later now so. And I apologize, we’d like very much if you would, Cathy, to weigh in on this conversation and offer up your perspective.
Qureshi: Sure, um. If it [slightly inaudible] state takeover, I hear everybody saying that, but I certainly haven’t heard anything from McAneny or anybody yet. If there was some statement this could work, that’s a good thing. But there are some serious concerns about the liquidity of the fund — and that’s something that we should, you know, as we work toward, we should not forget that we have 300 years left of payments. We can’t — on paper we can get to $565 million or 50% funded, but our real money is still what it is. And so all the interest earnings are only going to be based on the real money — and presumably the negative cash flow concerns will still all exist — and we’ll get less and less percent funded, and become less and less liquid.
Kraus: But what was virtually offered up to this Council for consideration did not solve the inherent problems with the pension system either…
Kunka: It did!
Kraus: If I may — thank you. It didn’t inherently solve the problems.
Qureshi: It didn’t solve them, it came a lot closer. Put in several hundred million dollars, which you can get interest on…
Kraus: Listen, we’re projecting about $287 million…
Qureshi: Not — you can’t get interest on it.
Kunka: It really is a paper transaction, it’s not a real asset to the fund.
Kraus: Having said that, um. Um. What I am, uh (oh god) what I am charged with accomplishing here today, it is to avoid the state takeover. I don’t believe the first plan helped to inherently solve what the pension problem was. And yet there’s a strong will on this Council to make sure reform does take place. We don’t have but 2 or 3 days, but I guarantee that’s going to be a topic of this Council clearly in the next year, to ensure reform. But um, on the plus side, of this agreement as opposed to the lease agreement, is that: we do not see borrowing of money, we do not see us paying interest, and we do not see us losing physical assets. To investment bankers. On that alone — we avert state takeover, we ensure our pension obligations to our pensioners, we ensure that public assets remain public, we incur no debt and interest. Somebody better convince me why that’s not a viable plan and why I shouldn’t be saying yes to that today. Sounds pretty good to me!
Urbanic: It — it is a temporary solution. It is simply to avoid state takeover. As Mr. Kunka and Ms. Qureshi said, it does not solve that problem. Uh, however, regarding cash flow issues: if we put in approximately between, um, between employee contributions, $50 million; and additional revenue of approximately $10 million, you get in the 60’s; um, we have approximately $300 million in the fund; if the fund earns a conservative 6% as it would in PMRS we should be able to receive about $20 million additional — $18 to $20 million additional in interest payment; um, that is if conservatively, the market does okay next year, even with conservative investment, we should be able to at least float even, and not lose money in the fund.
And then Kunka took issue with the optimism of Urbanic’s “rosy” assessment. And that’s where we’re at.
Pittsburgh’s body politic has “advanced” to the point where we’re mostly kneeling before each others’ favored golden idols — No new debt! No investment bankers! No state takeover! — but somehow, that to which everybody pays lip service as being most important — the health of the pensioners’ retirement fund and the seriousness of our long-term commitment to it — keeps winding up rather stubbornly in the back seat by comparison.