The Joplin Globe, Joplin, MO

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October 22, 2012

Joplin City Council approves source of pension payment; $1 million to be paid into fund from public safety surplus

The Joplin City Council voted Monday night to make a $1 million contribution to the Joplin Police and Firemen’s Pension Fund from a surplus in the public safety sales tax fund.

A work session on the matter was held at the request of Councilman Morris Glaze.

Glaze last week made a motion to amend the city’s budget ordinance so that the contribution could not be made until the council had an opportunity to discuss the source of the funds. He withdrew the motion, but the work session was scheduled in response to his concern.

He said after last week’s meeting that he was not opposed to making the contribution to the ailing pension plan, but he questioned whether the contribution should come from the general fund instead of the public safety surplus.

City Finance Director Leslie Jones made a presentation to the council Monday night about the status of the funding ratio in the pension plan and why it is declining.

The pension fund over time could owe as much as $68.4 million in benefits but has a current balance of investments of about $28 million.

The fund had been operating for several years on outdated assumptions on the number of retirements, rates of pay and other factors. They combined with lackluster investment returns and double the number of retirements, causing the funding ratio to dip from 59 percent to 53 percent, the council was told. That, in turn, will push up the amount of money the city must contribute to try to stop the decline of the funding ratio.

City Manager Mark Rohr proposed the lump-sum $1 million contribution to try to reduce the increases in the city’s contribution rate, Jones told the council. The city this year must pay an amount equal to 30.5 percent of the amount of payroll for the police and fire departments. Jones said a study of the proposal suggests that with the extra contribution, that rate could go to about 1 percent in the upcoming decade while increasing the funding ratio to around 75 percent.

Glaze and Mayor Pro Tem Bill Scearce said they wanted to make the contribution, but they wanted to know whether it should come from the public safety fund. They were told that the city attorney had advised that it is legal under the ballot language, which included allocations to personnel expenses as one use for the tax money. Voters approved the half-cent sales tax in 2006.

Several members of the city’s Sales Tax Oversight Committee attended the session. Some members of that group had questioned three years ago whether there was public disclosure by the city that a $950,000 lump-sum payment to the pension fund came from the sales tax money instead of the general fund.

A member of that oversight committee who promoted the sales tax measure in 2006 told the council, “I think it is legal to dip into it, but I have to ask: Is it proper?” He said he did not want to sign off on something that was contrary to what voters were told six years ago when he helped lead an effort to pass the tax.

Oversight committee member Tom Franz said he would not wish to jeopardize future tax questions if the voters thought the city had not stayed with the representations made in 2006.

Rohr said voters have since supported a renewal of the sales tax for parks and stormwater projects.

“If we move ahead, I want to be as transparent as possible with the voters,” he said, asking that the city publish information about the transaction and why it was done.

There was controversy three years ago over whether the city clearly disclosed to the public that a $950,000 payment came from the sales tax fund instead of the general fund.

Councilman Jack Golden said, “The general fund is going to have more demands on it,” with the city growing. “You have to be very careful” about spending from the general fund, which must cover the costs of that growth.

Councilman Benjamin Rosenberg made a motion to allow the transaction from the public safety fund, and it was approved 8-1, with Glaze voting against it.

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