A Philadelphia consultant hired by the administration of Mayor Andy Berke on Monday night told members of the new fire and police pension task force that fixes are needed to shore up the plan and protect city and taxpayer interests.
Vijay Kapoor of Public Financial Management (PFM) said at the group's first meeting at the Public Library that the fund is funded at 63 percent, but "to be blunt you want it at 100 percent."
He said, "Chattanooga is not Detroit," but he said he had "serious concerns" about the local plan.
He said PFM helped achieve marked improvements for the Lexington, Ky., fire and police pension fund, but he said it required concessions, including raising the retirement age, having members put in 12 percent of pay instead of 11 percent and reducing cost of living increase benefits. He said both sides hammered out the pact.
Mr. Kapoor said the local plan currently has almost $150 million in unfunded liabilities. He said the city's contribution has grown over 100 percent since 1998 and was $13.3 million this year.
At the close of the meeting, a number of fire and police officers gave opinions or asked questions. One said it appeared the meeting was "kind of one-sided." Another asked if the pension board and its experts would have a chance to make presentations.
Travis McDonough, the mayor's chief of staff who presided, said the 10 fire and police current and retired officers on the panel represent the pension board. He said PFM is talking closely with pension board officials and using their actuary's latest numbers from January.
He said if there is not a consensus reached by the task force that the PFM recommendations will still go forward to the mayor and the City Council.
Mr. McDonough said this administration will deal with the issue and not pass it along to another administration.
Police Chief Bobby Dodd said the situation is complicated by the fact there are at least six different groups of beneficiaries. He said the effect of changes needs to be considered for all the groups.
Local pension recipients currently get 3 percent cost of living increases Jan. 1 of each year.
It was noted that benefit costs went up significantly after a DROP plan was inserted in 2001. Fire and police members said that plan was the city's idea.
Mr. Kapoor and Mr. McDonough both noted that fire and police do not get Social Security benefits and rely on the pension payments. Mr. McDonough said the plan will be kept strong enough so the city can continue to draw quality candidates.
Mr. Kapoor said the financial rating agencies, including Moody's, have begun taking a closer look at municipal pension fund liabilities. He said Moody's recently lowered the ratings of a number of cities based on that factor.
Mr. Kapoor said he would be contacting members of the group individually for their input. He said he would be seeking input toward reaching an agreement on a new benefit program.
The next meeting is Oct. 7.
Click here to read the presentation.
Police Chief Bobby Dodd, Chief of Staff Travis McDonough and Fire Chief Lamar Flint