Time to pump up weak KC fire, police pension plans
The Kansas City Star
Just-released reports include sobering news for Kansas City taxpayers — and for thousands of current and retired firefighters and police officers.
The pension plans for the public safety employees are still struggling, even after the stock market has recovered much of its value since plummeting in 2009.
The firefighters’ plan as of April 2012 had just 78.5 percent of the assets it needed to fund future monthly retirement payments. In 2011, the so-called funded ratio was 81.8 percent.
The police officers’ funded ratio fellfrom 76.1 percent in 2011 to 75.5 percent in 2012. The plan’s liabilities increased by millions of dollars. While assets were listed at $734 million, the liabilities had ballooned to $972 million. That’s worrisome.
A funded ratio below 80 percent is the mark of a troubled plan, and now both public safety systems fall below that line.
These new reports are a wakeup call for city officials.
Mayor Sly James and the City Council later this year need to approve pension reform effective in the next budget in 2013.
If the city continues to punt this issue, taxpayers could face increasingly large burdens in the future to finance obligations made to city employees. Or the city at some point could be forced to dramatically reduce retirement benefits.
City Manager Troy Schulte said Monday he will suggest pension modifications for the city’s four retirement systems at a council committee hearing Wednesday.
Schulte has been meeting behind closed doors for months with representatives of the systems. They have argued about many of the proposals that the Pension System Task Force, largely made up of business leaders, developed last year.
The major ideas from the task force need to be included in Schulte’s plan. They are:
Increase the employee contribution rate by at least 1 percent.
Reduce the mostly automatic 3 percent annual cost-of-living adjustment.
Require employees to work a bit longer to increase their final retirement pay.
Cap taxpayers’ pension funding obligations.
In return for accepting these taxpayer-friendly changes, current and future city retirees would get something quite important: Their future benefit payments would be far more secure.