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Arbitration Ruling Costs Scranton, Pennsylvania Pension Fund Millions

Friday, April, 25, 2014


An arbitration ruling in favor of the city’s police and firefighters will cost the city’s pension fund between $6.9 and $10.5 million.  The award stems from a dispute with the unions regarding back pay to active duty members as well as retired members, who have a right to a portion of any back pay owed to active members.


Representatives of the pension fund have stated that the fund is already unable to maintain current funding rates, and the loss of additional millions from the principal will lead to a general failure of the fund and immense debt loads on the city itself.  The back pay portion owed to retirees can be withheld until after the active members receive their back pay, which gives the fund a little time to investigate options.  The pension fund is actually two distinct funds, one for the police and one for the firefighters, and the award will be paid out from each equally.


The range of the predicted cost to the funds has to do with the remaining dispute over whether or not members of the union are owed interest on the back pay, a nearly $4 million difference that could offer a sliver of hope to the funds if the interest issue is settled in their favor.