10SEP2009

City Council Approves Pension Fund Resolution

In a special meeting tonight, the City Council unanimously approved a resolution committing to other elements of an overall funding plan to address the Police-Fire pension shortfall if the Nov. 3 referendum for a 3/4-cent sales tax increase is approved.

The resolution has eight planks that include: raising the City’s contribution rate if the tax were approved; increasing the contribution from Tier I police and fire employees; and committing to close the self-funded plan and enroll future employees into the statewide LAGERS pension system, along with the voluntary move of current Tier II police and fire employees.

(The original version of Council Bill 2009-235 is linked, but doesn’t include the approved amendments.)

It also pledges to put any net proceeds from future telecommunications lawsuit settlements into the plan; restructure the Pension Board to eliminate any potential conflict-of-interest issues; and invest any net proceeds from the sale of City assets into the fund when it is legally possible to do so.

“This is the beginning of the journey, not the end,” Mayor Jim O’Neal said. “I know we’re going to have to combat confusing and misleading information.

“When you peel back the veneer I think there are some simple issues that make this easy to understand,” he said.

Before the 8-0 unanimous vote (Councilman Jerry Compton was absent), the Council made a series of amendments to the resolution.

The eighth item was added on a motion by Councilman Doug Burlison not to propose any city-wide tax increases during the first five years if the referendum were approved. His motion excluded renewals of existing taxes, those proposed as countywide issues and any new state or federal mandates.

The other substantive amendment was proposed by Councilwoman Cindy Rushefsky, who initially wanted to delete the plank detailing a 2 percent increased contribution by police officers and firefighters. She objected to it because one of the five employee groups, the Springfield Police Officers Association, did not support the increased contribution rate. The Firefighters Local 152, the Police Sergeant’s League and the Police and Fire leadership groups have endorsed the increased contribution.

SPOA President Mike Evans told the Council that the group withheld its support because it wanted more discussion in the meet-and-confer sessions about reinstating merit increases, which were frozen in this year’s budget. City Manager Greg Burris said he could not make that commitment because that is the City Council’s decision as part of approving the annual budget. Evans said he believes the SPOA membership wanted to be supportive of that element of the resolution, but was not ready to endorse it without additional discussion.

Councilwoman Rushefsky withdrew her motion and instead offered an amendment to that plank to strike the word “voluntary” contribution based on the SPOA position and also to remove a clause noting the positions of each organization. Her motion was approved.

The other amendments involved committing to putting telecommunications money into the pension fund as long as it was less than 100 percent funded instead of 80 percent funded, and clarifying that the City’s proposed 35 percent contribution rate would be over and above the revenue created if the sales tax were approved.

Two members of the public spoke. Carl Herd, who served on the Citizens’ Task Force, said he believes the Task Force and the Council were rushing the issue to the November vote. When pressed for his solution to the shortfall, he said he thought the voters should decide whether the City Charter should be changed to convert Tier I employees to the lesser benefits offered in the Tier II plan going forward.

City Attorney Dan Wichmer said he believes that if the City Council tried to put that Charter Amendment on the ballot, the employee associations would sue the City, forcing a stay on the issue until it was resolved in the courts. He estimated that could take up to three years, during which more Tier I employees would retire and receive the benefits anyway.

Mayor O’Neal challenged Mr. Herd’s proposed solution.

“I think it’s confusing and misleading and the facts are different,” the Mayor said.

Steven Reed, the other public speaker, asked why the City couldn’t apply for federal stimulus money to fund the pension shortfall, which some cities have discussed.

Burris said the idea was broached with the federal delegation, but they indicated the idea wouldn’t get much traction because it did not meet the litmus test that stimulus money should support job creation.

posted by Louise Whall, Public Information

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