HARRISBURG - The state's top fiscal watchdog is calling for consolidation of the numerous municipal pension plans into a statewide system as a way to produce higher yields on investments and reduce administrative costs.

Pennsylvania is saddled with too many small and inadequately funded municipal pension plans that cost taxpayers millions of dollars to run, said Auditor General Jack Wagner last week.

"Consolidation is the best way to preserve benefits for retirees and future retirees while protecting taxpayers from higher tax bills they can't afford," Mr. Wagner told the Pennsylvania Employee Retirement Commission.

He said consolidation could be done either with a statewide system with different classes of employees such as police, firefighters and non-uniformed or giving the State Employees' Retirement System authority to administer the individual plans.

Pennsylvania's 3,200 local government pension plans comprise more than 25 percent of the public pension plans in the United States. The pension plans range in size from a handful of members to more than 20,000 active members. But two-thirds of the plans have 10 or fewer members.

Mr. Wagner released an audit report showing that 36 percent of the plans are considered financially distressed and separated into three categories: severely, moderately and minimally.

Consolidation could have the greatest impact on the 52 plans that fall in the severely distressed category. They are underfunded with less than 50 percent of their plan liabilities covered.

In Northeast Pennsylvania, pension plans in Scranton, Dunmore and Roaring Brook Twp. in Lackawanna County, Hazleton in Luzerne County; North Towanda Twp. in Bradford County, East Norwegian and Foster townships in Schuylkill Count; Forest Lake , Liberty and Susquehanna Depot townships in Susquehanna County and Salem Twp. in Wayne County are severely distressed.

The pension reform issue is on the front burner due to a spike in payments by state and local taxpayers to meet obligations. PERC is holding a series of hearings this fall to examine issues.

Blight targeted

A Republican senator plans to introduce legislation giving mid-sized cities new tools to develop abandoned or blighted properties for commercial use.

Sen. Lloyd Smucker, R-13, Lancaster, proposes to allow cities to create Community Revitalization and Improvement Zones. His measure would authorize a city authority to issue bonds to finance development projects in a CRIZ. Also, all state tax dollars collected from businesses in a CRIZ would be dedicated to repaying the debt on those bonds under the bill.

The goal is to reinvest state and local tax funds created in a city for use by that city, said Mr. Smucker.

ROBERT SWIFT is Harrisburg bureau chief for Times-Shamrock Communications newspapers, of which The Daily/Sunday Review is a part. Email: rswift@timesshamrock.com.