KC's pension reform bogs down at City Hall
The Kansas City Star
Five months ago a group of business leaders recommended a promising pension reform plan for Kansas City employees.
But that proposal now is bogged down at City Hall, the victim of political machinations.
At a meeting today, the very people who would be most affected by any retirement funding changes — including union leaders, police officials and other city employees — will gather for yet another session to discuss if and how pension reform could proceed. A consultant who could cost taxpayers an additional $50,000 is being retained to help review the issue, too.
This meeting will be closed to the public, unlike the task force get-togethers that were held in the open.
This turn of events is disturbing and disappointing, especially given the positive talk surrounding these issues last November.
That’s when the Pension System Task Force made its much-needed proposal to overhaul the city’s costly and underfinanced retirement plans. The recommendations, discussed for months, included reports prepared by consultants who received $100,000 in city funds.
The final plans were designed to save millions for taxpayers and to shore up the city’s four pension systems, which guarantee monthly payments for police officers, firefighters and other city workers.
Mayor Sly James praised the task force’s efforts. A City Council resolution told City Manager Troy Schulte to push to put everything in place “based on the recommendations outlined in the report of the Pension System Task Force.”
Schulte was supposed to be done by mid-March, but later was granted an extension to mid-year.
Reached this week, Schulte said he had put together the working group of mostly city officials to review the task force’s proposal. He said he wanted to get buy-in for pension changes from people who represent blue-collar employees, firefighters, police officers, management personnel and other city workers.
“We are making progress,” Schulte said.
Within 60 days, Schulte hopes to bring a final plan to James and the City Council to take effect by May of 2013. The goal, he said, is to keep the city’s funding of pensions to $54 million a year, which he said would require adopting some or most of the task force’s recommendations.
But in an interview Wednesday, Pension System Task Force Chairman Herb Kohn said he was especially concerned about the delays in approving the reforms at City Hall and about any potential changes to his group’s proposals.
Kohn and other Kansas Citians have good reasons to be worried about how this process is playing out.
Dozens of large cities and many states have been trimming their unaffordable pension obligations for the last few years. Kansas City is already behind the curve, largely because it has underfunded its pension obligations by tens of millions of dollars over that time. In Schulte’s words, the city’s systems currently are “unsustainable.”
Against that backdrop, the task force made some excellent recommendations last November.
Increase the employee contribution rate by a minimum of 1 percent.
Eliminate the mostly automatic 3 percent annual cost-of-living adjustment for many retirees, replacing it with one that could average 2 percent or less a year, still generous by private-sector standards.
-Require employees to work a bit longer to increase their final retirement pay.
- Cap taxpayers’ pension funding obligations so they don’t become a much larger portion of the city’s overall expenses — an important priority given the city’s tremendous needs in repairing infrastructure and providing other basic services to residents.
However, some of the task force’s proposals are on shaky ground with the working group of city officials put together by Schulte.
He said this week that reducing the cost-of-living adjustment for retirees or current employees might not be legal, meaning it might apply only to newly hired workers. In fact, the solid concept of reducing other benefits for current workers appears to be in trouble, too.
More positively, Schulte said the group hopes to agree on procedural changes such as standard amortization schedules for the different pensions.
It’s also encouraging that Schulte wants to establish a 401(k)-style plan for some workers. The task force had not embraced or rejected that idea.
Overall, however, the closed-door meetings on pensions mean an expensive delay for reasonable adjustments. Clearly, Kansas Citians will get the kind of reform they deserve only if Schulte, James and the City Council fight for that goal.