City Council members were told Tuesday they are facing millions of dollars in catchup costs for the fire and police pension fund.
Pension fund officials said the city will need to invest some $1.6 million per year more with the fund to keep up with the latest state requirement.
Less Lee, City Council appointee to the fire and police pension fund board, said the fund has been at a level of about 60 percent of obligations, but that needs to move to around 80 percent.
The changed formula goes fully into effect in 2021, but cities need to begin now to catch up, it was stated.
Frank Hamilton, fire and police pension fund director, said, "The new amortization requirements under the Public Employees Defined Benefit Financial Security Act, adopted by the state came out last year after the city's budget had been adopted. The Fire and Police Pension Board worked in collaboration with the city administration to minimize the impact on the newly approved budget last year, by phasing in the new requirements over the next few years.
" The new state mandate is not required until 2021 and while the phase-in minimized the impact on last year's budget, it also avoids future trouble by 'kicking the can down the road'."
Councilman Ken Smith asked how much the city's contribution would have increased if the new amortization requirements had been fully implemented in last year's budget. Board President Craig Joel said, "If the new amortization method were fully implemented in last year's budget, then it would have required an additional $1.6 million contribution. However, since knowledge of the new requirement came out after the budget had been adopted, we thought it best to work with the city administration under its budget constraints last year."
Daisy Madison, city finance director, said the city's general pension fund is in good shape. "There are no added dollars needed," she said.