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Chester CFO: 2026 minimum municipal obligation $10.7M, required payment may rise to $13.9M and affect next year's budget
Summary
Chief Financial Officer Richard Trautman presented pension funding figures at the Sept. 10 meeting, saying the actuaries calculated a $10.7 million minimum municipal obligation (MMO) for 2026, but rule-driven requirements could increase the actual payment to about $13.9 million, representing about 23% of the city's projected budget.
Richard Trautman, Chester’s chief financial officer, presented the 2026 Minimum Municipal Obligation (MMO) for the city’s pension plans at the Sept. 10 council meeting, as required by Pennsylvania law.
Trautman told council the actuaries calculated an MMO of $10,700,000 for 2026 — about $128,000 less than the prior year — but cautioned that accounting rules (including items under Act 205) mean the practical required payment could rise to roughly $13,900,000. He said that additional amount reflects residual adjustments and prior years’ unpaid obligations that are spread over time.
“Three-quarters of the money is for old scenarios that have to be reflected,” Trautman said, describing the portion of the MMO that stems from past plan changes, investment performance variances and other adjustments. He said the city is carrying well over $50,000,000 in residual adjustments that affect future calculations.
Trautman also explained the city receives roughly $2,000,000 a year in commonwealth aid applied under municipal pension formulas and that distressed earned income tax receipts are required to be applied to pension obligations. He characterized the calculations as “complicated” and said staff will revisit the numbers as the budget process proceeds.
Nut graf: The distinction between the actuaries’ $10.7 million MMO figure and the rule-driven required payment of about $13.9 million will be an important factor as the city prepares its 2026 budget; Trautman said the higher payment equates to about 23% of the projected budget.
Ending: Trautman closed by saying the presentation was being placed on the record and that the MMO figures and assumptions would be revisited during the city’s budget deliberations.
