Meadville Tribune

September 28, 2013

SUNDAY ISSUE: County funding surplus

By Keith Gushard
Meadville Tribune

MEADVILLE — What should Crawford County do with about $4 million in excess funds in its workers’ compensation fund?

It’s a question Francis Weiderspahn Jr., C. Sherman Allen and Jack Lynch, the county’s three governing commissioners, will be wrestling with collectively in the months ahead as the county forms its 2014 budget.

All three said in a recent interview that they want to make wise choices — whatever is done with the money.



How it came about

Earlier this month, a report on the comprehensive 2012 audit found the county has approximately $5 million in its workers’ compensation insurance fund, an amount the county’s risk management adviser told county officials could be lowered substantially.

Workers’ compensation insurance provides coverage for an employee who has suffered an injury or illness resulting from job-related duties.

Mari Murphy of Risk Management Resources of Carnegie, the county’s risk management advisor, has recommended that based on its claim history, Crawford County could just set aside $500,000 to $600,000 in its workers compensation fund even though the county self-insures its workers’ compensation fund.

However, the three commissioners and Jody Marley, the county’s chief financial officer, are leaning toward keeping $900,000 to $1 million in the workers’ compensation fund in case of a catastrophic claim.

The growth in the workers’ compensation fund to about $5 million happened  over a period of years was due to a lack of information being shared among county departments, according to the current board of commissioners.

Until last year, the county’s chief financial officer also served as the human resources director. The current board of commissioners separated those duties and hired a full-time human resources director.

Commissioners say they’ll have a better understanding of what they’ll want to do with the excess funds as they look at both the 2014 budget and the years beyond.

“We have to be smart in terms of subsequent years,” Lynch said of what he feels the board needs to do. “I think it’s premature to say ‘Here’s what we’re going to do with the money.’”

“I don’t have any issues on where it’s going to go,” Allen said. “Once the (2014) budget is worked out we’ll have a better idea. I don’t want to spend it just because there is money there. We need to have some in reserve for catastrophic claims.”

Weiderspahn, who is commissioner chairman, agrees with his colleagues.

“We have to try and plan out what the effects might be,” he said of not only the 2014 budget, but those of following years.



Others weigh in

One thought put forward has come from Republican state Rep. Brad Roae, whose district is the eastern half of Crawford County including the cities of Meadville and Titusville.

Roae cites Pennsylvania’s 2012 Public Employee Retirement Commission report, that says Crawford County’s employee pension plan is underfunded by $9,728,144.

“I think the obvious place to use the $4 million would be in the underfunded pension plan,” Roae said in an email to the Tribune.

“There is only 82 cents of assets for every $1 of pension benefits owed to retirees and future retirees,” Roae wrote.“The plan has $45,440,729 in assets and $55,168,873 in liabilities.”

Commissioners agreed the excess workers’ compensation money could be used toward pensions, but it wasn’t necessary since the county has an actuarial study done each year on its pension needs. That study takes into account both current retirees and beneficiaries as well as future retirees.

The 2012 comprehensive audit done by Maher Duesel, a certified public accounting firm, found the county was within the acceptable range of having its pension being funded.

“Cap Trust and the Hay Group (the county’s pension fund manager and actuarial advisor, respectively) give us a recommendation every year,” Weiderspahn said.

The county budgets between $2 million to $3 million each year from the general fund to meet its pension obligation, Weiderspahn said.

“We make a payment annually to meet the liabilities that are projected out by the actuarial study,” he continued. “We have been paying it out of general funds and have it budgeted each year.”

The county has 214 people receiving pension benefits now plus another 41 eligible to receive benefits but are deferring them. There are another 267 active employees who meet the minimum qualification in terms of years of service for benefits, but aren’t eligible to receive them yet; and another 315 active employees who haven’t yet met the minimum qualifications and aren’t eligible to receive them yet.

Those numbers can change from year to year as people leave the system for one reason or another, according to Marley. Factors influencing the number include people leaving county employment before they are eligible for a pension or the death of a person either receiving benefits or eligible to receive benefits.

“You don’t need 100 percent funding because not everybody is going to retire at once,” Lynch said. “The key to this thing is to keep the retirement funded up to a point that makes sense and that’s where the actuarial report comes in. It’s a possibility, but don’t forget that’s a one hit thing when there are so many other needs across the landscape.”

Hugh King, a former county commissioner candidate who has been a critic of government spending, said he feels the county should use some of the funds toward economic development or infrastructure.

King said the county should promote the region’s highly skilled tooling industry to businesses such as arms makers in Connecticut where gun laws are becoming more restrictive.

“We should try to entice them to come here,” King said.

King said he also would like to see the excess workers’ compensation dollars put toward improving county-owned bridges and other infrastructure.

“It needs to be something tangible or long-lasting,” he said.



Other potential uses

The money potentially could go toward paying off the county’s long-term debt of approximately $3.4 million.

Marley said the county has one outstanding bond issue of $2,092,666 taken out for capital improvements at both the Crawford County Courthouse and county-owned former Talon Inc. property in Meadville.

There is another smaller bond issue of $656,013 for demolition work at the Talon Inc. property.

The county also has a long-term note of $637,610 taken out for roof work at the Quality Living Center in Saegertown.

The county’s three commissioners all said they’d like to keep much of the excess worker’s compensation money invested and just use the interest generated from investment of the money toward any projects.

“I’d want to keep the principal intact,” Lynch said. “The county’s never invested money in a way to go toward a specific line item (in the budget).”

Possible uses Lynch sees include upgrading the county’s computer systems or more energy efficient windows on the courthouse.

“There are still some unknowns, but the budget will give us a better idea,” he said. “The goal is not to look at just 2014 but at least three years out.”

Allen agrees with Lynch that the county’s technology systems may need upgraded.

“Not only for courthouse use, but for the general public,” Allen said. “They may not be things that pay back immediately, but they should make employees more productive or the courthouse more consumer-friendly.”

“We have to make sure the money spent on any kind of project hopefully shows some type of return — whether it’s streamlining operations or have a pay back,” he said.

Weiderspahn said the excess workers’ compensation funds could be put toward capital improvements.

“I want to try to keep most of it in there and not touch the principal,” Weiderspahn said. “We will have things (to buy) like computers and other major items. We don’t have a capital (improvement) budget.”



Keith Gushard can be reached at 724-6370 or by email at kgushard@meadvilletribune.com.