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Published March 19, 2008 11:34 pm - Joplin’s Police and Firemen’s Pension Fund Board turned down a request by the city manager to allow the fund’s membership to vote on a proposed funding change intended to make the fund more solvent. Local pension board OKs advisory vote By Debby Woodin
dwoodin@joplinglobe.com Joplin’s Police and Firemen’s Pension Fund Board turned down a request by the city manager to allow the fund’s membership to vote on a proposed funding change intended to make the fund more solvent. The board and city staff members debated for more than three hours Wednesday, largely over one element of the proposal: allowing the city to cap increases in annual payments to the fund at 3 percent in the event that the municipal government would experience an economic crisis. The board ultimately decided to ask its membership for an advisory vote on the proposed plan without the cap provision. Several trustees and their attorney, Dan Tobben, of St. Louis, contended that the city should agree to finance the plan at rates recommended by a financial expert or actuary every year. City Manager Mark Rohr, Finance Director Leslie Jones and Mayor Jon Tupper contended that the city should be protected from having to make an extraordinary contribution that the city might not be able to afford if a serious economic challenge arose after the plan is solvent. The fund is considered precarious because at current levels of city contribution, the fund has only enough money to pay out about 58 percent of the benefits it is obligated to cover, according to figures of the plan’s financial experts. State law now requires that plans be funded at 60 percent, and the preferred level of funding is 80 percent. The city now pays in an amount equal to 17 percent of the cost of fire and police payroll. Employees contribute 18.08 percent, but they get that back in a lump sum when they leave employment or retire. They can retire after 20 years of service and begin receive benefits. But, that 20-year retirement benefit and the city’s failure in past years to make sufficient contributions have reduced the fund’s solvency. Rohr told the board that the proposal, advanced by a committee headed by him that included police and fire employees, would require the city to put in the actuarial-recommended amount each year, except to limit the increase to 3 percent in one year to offer the city “downside protection.” Board member Charla Geller said she is concerned about agreeing to such a cap because retirees need to know the funding is going to be there to pay their benefits even if there is an economic downturn or crisis. Rohr said that if the recommendation were adopted, the payment plan would be enough to finance benefits without interrupting any payments to retirees. Tobben, the board’s attorney, advised trustees that they should not accept anything other than an agreement for funding at actuarial levels. He compared the fund to a debt, with the city’s contributions like installment payments on the debt. The board is willing to allow the city a couple of years to catch up current arrearages, he said, “but you have to go to pure actuarial funding or the debt won’t be paid off.” He advised the board that if the membership didn’t support the funding option, the board could go back to discussing a lawsuit. Rohr contended that if the city used any other method to fund the plan, such as borrowing money, it would be allowed to renegotiate for lower terms in the event of an economic downturn. 
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