The state is home to a quarter of all U.S. public pensions and has paid at least $2 billion to help manage local retirement systems.
As a result, thousands of retirement plans covering no more than 10 workers have begun appearing, with some covering fewer than five.
Some Pennsylvania municipalities don’t monitor administration costs on their retirement plans, according to Bloomberg.
“There’s no incentive to reduce your municipal expenses if the state’s paying,” James McAneny, executive director of Pennsylvania’s Public Employee Retirement Commission, told Bloomberg.
Pennsylvania officials say the state’s assistance has prevented insolvency for many of the 21 communities in the program, according to Bloomberg. Despite the aid, half of the state’s employees are in plans where pension liabilities are only 50 percent funded.
“If the pension fund gets to a point that they may raise taxes, I don’t know what they’ll do,” Ardith Deal, secretary and treasurer for the town of Elk Lick, Penn., told Bloomberg. “I know that’s not what they had in mind. They don’t want to raise taxes to pay the four of us to retire.”