Audit: State due $15,000 refund from Reading's pension fund

The City of Reading recently exited its status as a financially distressed municipality, but a recent audit report noted it still has some financial problems to fix.

In previous years, city officials miscalculated state aid they were set to receive for their pension plan, leading to an underpayment. The latest report found, instead, that the city received too much state aid.

Officials overstated payroll due to improperly certifying two employees, which led to a $15,000 overpayment, the audit report noted. In 2020, incorrect data on the certification form led to the commonwealth underpaying state aid to Reading by $59,000.

Certification refers to municipalities ensuring that employees are qualified to participate in the pension plan and have worked long enough to count toward state aid calculations.

“We are concerned by the city’s failure to correct these previously reported audit findings and strongly encourage timely implementation of the recommendation,” the report noted.

Though the city has struggled to accurately certify some employees, its pension funding levels didn’t raise any concerns with the auditor.

Its officers and employees pension had a funding ratio of almost 86%, up from a 76% ratio in 2017. The plan has 252 active members, 32 terminated members who qualify for future benefits, and 279 retirees.

Reading’s firemen’s pension also remains in good shape, improving to an 85% funded ratio from 82% in 2017. It has 113 active members, 9 terminated members who qualify for future benefits, and 162 retirees.

The city's police pension lags behind slightly, with a 71% funded ratio, improving from almost 63% in 2017. It has 139 active members, 2 terminated members who qualify for future benefits, and 329 retirees.

Reading was declared financially distressed in 2009 and put in an Act 47 recovery program for 13 years until exiting in July 2022. The city had “years of recurring budget deficits, ineffective financial management practices and unfavorable socioeconomic trends,” according to the Reading Eagle.

To turn it around, city officials had a number of budget surpluses and reduced debt by 34% over a decade. That required salary freezes for city workers and restrictions on city services.

Reading officials aren’t alone in getting criticized by audit reports. Smaller townships and boroughs make similar mistakes in calculating state pension aid, as have other cities such as Lancaster and Bethlehem, as The Center Square previously reported.