Advocates for the city’s public safety workers say city taxpayers face a choice — pay a little more now, or pay a lot more later — to fund their pension programs.
Tim Schoolmaster, president of the Police Pension Board, told residents at an online 1st Ward meeting Tuesday evening that if the pensions weren’t underfunded now “60% to 70% of pension benefits would be paid for by pension fund investment income.”
If they were properly funded, he said, the cost to taxpayers would be only about 25% of the total, with just under 10% paid by employee contributions.
But with the pension programs only roughly 50% funded now, taxpayers “are paying three times as much now as if it had been fully funded in the past.”
Jason Franken, the actuary to the pension boards and the city from the firm of Foster and Foster, said the city would need to add about $4.5 million to the proposed 2023 budget’s pension contribution of $20.6 million to be on track to have the pensions fully funded by 2040.
Retired firefighter Dave Ellis said he thinks the city should issue pension bonds to close the funding gap.
But Ald. Clare Kelly (1st) said that, given the large size of the city’s existing bond debt, it could end up harming the city’s credit rating to pile on that much more debt.
Schoolmaster added that while issuing pension bonds might have been a good idea a year or two ago when interest rates were around 2%, it wouldn’t be a smart move in today’s higher interest rate environment.
Kelly said the city is likely to face a recession and higher interest rates for years to come.
“I feel the city can cut back in many areas, and — if need be — potentially raise the property tax levy” to fully fund the pensions, she added.
Leslie McMillan, a member of the city’s Finance and Budget Committee, said, “I think there’s a lot of fat in the budget.”
She suggested not spending to repair the broken fountain in Fountain Square and scaling back spending on the planned new animal shelter.
“There’s a plethora of things in the budget that ought to be cut back,” she added.