Joplin can slightly scale back its annual contribution to the ailing Police and Firemen’s Pension Fund if the City Council agrees.
The actuarial firm hired by the fund’s board of trustees, Gabriel, Roeder, Smith & Co. Consultants & Actuaries, recommends that the city’s contribution rate for next fiscal year be set at 30.87 percent of the total amount of the police and fire departments’ payroll. This year’s rate is 31.46 percent.
“That’s what we were hoping, and that’s what we projected,” said Leslie Haase, the city’s finance director. “It appears so far we might be headed in the right direction” toward bolstering the funding ratio of the pension plan.
Haase had said last year that the 31.4 percent rate was the highest it should reach, and that it should trend downward as a result of extra allocations and benefit changes that have been made.
Employees of the police and fire departments have contributed more than 15 percent of the payroll amount.
Even though the percentage is smaller, raises and the number of employees covered by the plan would increase the dollar amount of the city’s obligation from $2.58 million this fiscal year to nearly $2.74 million next year, according to the actuarial report. Three actuaries were involved in analyzing the fund, and one, Brad Armstrong, presented the findings Thursday to the pension board. He recommended that the city make its contributions continuous, or every payroll cycle, rather than by lump sum. The board voted to make that change.
Armstrong said the funding ratio has climbed slightly from 53.3 percent to 54 percent. That amounts to a liability of more than $24.4 million if all beneficiaries made claims at the same time. To be safe, the fund needs to have all of that covered.
Armstrong said that under the terms of the current plan and a change in the method used to amortize the plan, it will take 20 to 25 years to make the plan 100 percent funded. Haase said the city would believe the funding ratio is satisfactory at 80 percent.
The funding ratio has fluctuated since 2007 from 58 percent to as low as 51 percent.
The City Council in past years had put less than the actuarial amount, about 17 percent of payroll, into the plan. At the same time, more employees than anticipated took a 20-year retirement benefit that had recently been adopted. That, along with two economic recessions that have happened since 2000, reduced the funding ratio and the market value of the plan.
The City Council agreed to contribute the actuary-recommended amount and to make special allocations to settle concerns of pension board trustees. The council also has authorized two $1 million contributions at the recommendation of Haase and City Manager Mark Rohr.
The plan’s market value at the end of the fiscal year in October 2012 was nearly $28.4 million, and that has grown to about $31.9 million now. It would need about $67 million to be fully funded for all potential claims of present and future retirees and beneficiaries.
A disabled beneficiary, Tom Robertson, has filed a lawsuit against the pension board because of the formula used to figure disability benefits. He contends that the city is reducing the benefit amount by the number of years the employee lacked until retirement. A circuit court judge has ruled in favor of Robertson, and the city has appealed the case. It is pending in the Missouri Court of Appeals at Springfield.
The board held a closed meeting, citing a legal matter, on Thursday.
Covered by fund
THERE ARE 326 PEOPLE covered by the municipality’s pension plan.