Heed the pension warning signs in KC and in Missouri
Missouri taxpayers soon will find out how expensive it can be to ignore pension reform.
Next year, it will cost an extra $55 million in public funds for the state to make monthly payments to thousands of retirees. That’s a jump of 20 percent, up to almost $330 million annually.
Part of the problem is that the Missouri State Employees Retirement System didn’t make enough in the stock market in the past year to cover its costs. But the plan also is paying the price for not making needed changes a long time ago. It wasn’t until 2011, for instance, that state workers began contributing 4 percent of their salaries to the system.
Kansas City officials better be paying attention to what’s happening at the state level.
New figures released this week show that total liabilities for the city’s four pension plans in 2012 grew almost 10 percent over 2011. The city is now short more than $600 million when it comes to fully funding retirement benefits for its workers.
On Wednesday, City Manager Troy Schulte told a City Council committee that union representatives and other city officials had made progress on potential reforms. One good idea is to boost employee contributions by 1 percentage point.
But the group, which meets again today, is far apart on what should happen to the annual, often-automatic 3 percent cost-of-living adjustments for retirees. The city wants to be able to cut them back in tight times; workers want to retain the full adjustments.
Committee chair Jan Marcason told Schulte she wants to see a better, possibly final plan in two weeks. She’s right to keep the pressure on. These talks could drag on forever without strong oversight by elected officials.
Given the continued weakness of Kansas City’s pension plans, changes to financially strengthen them must be made starting in 2013.
Comments
No comments have been posted. Perhaps you'd like to be the first?