The final say about whether to use excess pension funds to pump money into new trusts to cover health benefits for retired municipal workers will rest with the City Council.
Bruce Barth, a pension attorney, told the city’s GASB 45 Committee this week that the council would need to adopt a new ordinance laying the groundwork for the change that some officials say could save taxpayers tens of millions of dollars.
Named for an accounting rule, the GASB 45 Committee is supposed to examine the issues surrounding the proposal and recommend to the council what course the city should take.
Some union officials have said there are legal complications the city needs to take into account. They also argue that any revision to the existing pension funds should be negotiated rather than dictated by the city.
Barth said the potential shift of money into the new funds for retiree health care “may be negotiable,” but doesn’t have to be.
The basics of the plan are pretty simple.
Under federal law, the city can shift money within its pension trust fund into a new fund for retiree health benefits if the pensions are more than 120 percent overfunded. If the pension fund falls below 120 percent of expected funding needs, the money would be automatically moved back to cover pensions, Barth said.
In any case, the money would remain under the control of the pension fund trustees and would not actually be removed from the fund at all.
Because all the pension fund’ money would be invested as if it was part of a single fund, Barth said, it’s largely an accounting procedure to keep them separate on paper.
City employees would get something out of it, officials said.
Barth said that if the city makes the move, every city worker at the time it’s done would be automatically vested in the pension fund and the city could not change the health benefits it offers retirees for five years.
City Comptroller Glenn Klocko said that taxpayers would gain substantially if the city can do it.
As it is, he said, the city pays out $3.6 million for the health care of retirees, who receive municipal health care for 10 years after they retire.
To get ahead and cope with future demands on the health care system, Klocko said, the city needs to put another $5 million aside annually or it could put $72 million aside all at once.
That’s a tall order for most municipalities, but Bristol has pension funds that are so flush it may be able to do that.
The pension funds this week total about $417 million, with the fire and police funds still well over the 120 percent mark that allows them to be tapped into for the new health benefits account. The general city plan is also overfunded, but it’s probably not much over the mark at the moment after months of battering on Wall Street.
At their height last year, the city plans had more than $550 million between them.
Steve Lemanski, an actuarial expert who consults for the city, said that health care costs are expected to go up about 10 percent yearly in the short term but to slow to about 5 percent annually long-term, if only because the economy can’t cope with the current rate of growth for long.
Lemanski said that the cost of vesting employees early is “really minimal” in the scheme of things.
Klocko said this is the perfect time to explore the option because the market has already crashed. It almost certainly is going to head up again in the years ahead, he said, so the excess in the pension funds is likely to grow larger, not lesser.
Union officials have said they may be willing to go along with the change if the city shares some of the benefit with workers. Among the possibilities, they have said, are giving lifetime medical care to retired employees, dropping employee contributions to the plan or adding some other benefits to those already provided.
What’s most important, they have said, is that the city negotiate with them in good faith rather than dictate changes that might affect money already set aside to pay for employee pensions.
Bristol is one of the few municipalities in the state that has a fully funded pension plan. It is one of the most flush funds in the whole country, the result of a 30-year-old city policy to put aside money for the future expenses involved, a move that is already saving taxpayers more than $6 million annually.
What’s next?
The GASB 45 Committee meets at 5 p.m., Tuesday, Feb. 3 to hear from the city’s financial adviser. After that, it plans to listen to public comments.
The committee chairman, T.J. Barnes, said he would like for it to make its recommendation by mid-February.
Contact Steve Collins at scollins@bristolpress.com
27 comments:
We have five years to negotiate out the post "ridiculous" (retirement) healthcare costs to Bristol tax payers who are struggling to make ends meet. Dam those lazy union hacks, can't they see how ignorant they are being?
Those "lazy union hacks" are for the most part residents of Bristol. They also consist of your Policemen and Firemen, who work hard to protect you. They're feeling the same economic pinch as you, only they don't direct their anger at you in an internet forum. They only ask to receive the standard compensation as anyone else in their profession nationwide. Why not take the civil service test and try and get hired yourself if you're so dissatisfied with your career?
Negitive...it's not the rank and file...it's the leadership like Petosa.
cut the crap, 8:29. city employees aren't even close to feeling the economic pinch like other people. city employees don't have to worry about losing their job anytime soon, they don't have to worry about health care costs or whether they can afford to retire. city employees have political leadership who give them anything they want in exchange for their votes, the unions have the mayor and council in their pocket, partly because the mayor and council are directly connected to the unions because of family. city workers are guarnateed raises while other people are facing pay cuts or layoffs. if city workers only want to receive standard pay as anyone else in their profession, then does that mean a city worker working as a secretary or office clerks will be willing to take a pay cut, because I don't know of any secretaries or office clerks making $50,000, but if they work for the city of Bristol they do.
9:02 - stop your whimping and deal with the fact that city employees are delivering a different set of services to the public than the private sector which changes the effect of layoffs and the like.
Stop picking on city employees, they work hard serving the public and earn the benefits they get. If you are jealous, you should get a city job.
Come NOVEMBER the ride will be over at City Hall.
9:02, Do actually believe the crap you're spewing? I don't think that there's anyone who can afford not to worry about the economy, even those "lazy union hacks." There's no such thing as job security anymore.
Talk about being greedy!! The unions will move the money but they want life time benefits!
Are you kidding me! How about Ward stops protecting his union boy's and starts laying them off like the other citys around! We are way over staffed and Wardy won't do anything.....oh yeah....he's raising taxes to pay for there raises!
This will never pass the coucil.
McCauley will vote no...Union Boy
Ward will vote no....Union boy
Nicastro will vote no....Union Boy
Minor will vote no.....Union Boy
Rimcoski will vote no....does what Ward wants.
That leaves Block and Cockayne! We all know what Cockayne will do! Just leaves Block? My guess is no!
For once I'd like to see the Council do what is right for ALL of Bristol, not just work for those they are beholden to!!
Articles in the 1-29-09 Times and Journal as to how union membership increased last year, mainly in the government sector.
Better get used to it as long as Obama is in charge.
Stop sticking it to the Taxpayer!! They work just as hard and in most cases do not have a safety net of contracts that ignore the economic realities of the world in which we currently live.
It's time for public employees to realize that they are the ones serving the taxpayers not vice-versa.
Don't forget, you elected Ward!
Maybe you should remember who pays into the pension fund, it's not the tax payer, it's the union members. What's wrong with asking for benefits from money that you contributed. The city hasn't had to contribute to the pension fund in years so the tax payer hasn't put money into this fund. You should get you facts straight!
I believe there is a state law that prohibits towns from doing this exact thing.
The union members contribute to the pension fund because they signed a contract with the City to do so. In return, the City promises to pay them a fixed pension regardless of how well the pension fund performs.
If the unions want to have a say in whether the City can use excess funds generated by that fund to pay for OPEB, then maybe the City should start thinking about switching to a defined contribution pension plan, instead of the current defined benefit pension plan. Do they REALLY want to go there?
If you had attend the Tuesday meeting the City's pension attorney indicated that this could take places as long as certain conditions were met. I also think it is funny that the City Unions want to say they own the money that has been set aside to pay for this liability, but in the end the City taxpayer is on the hook for these promises regardless of the pension or health care funds solvency.
I believe the Union wants those excess funds for increase retirement benefits that will always be the Taxpayers liability regardless of the funds balance.
You can't have it both ways union!! You can not own the asset, and not the liability. One goes with the other.
7:03 the basis of your argument can be taken to also mean that the taxpayers portion is theirs and they should be able to ask for more benefit from their contributions. Seeing as in the beginning of the pension funds the city contributed a much larger portion than the union member the excess fund that are directly attributed to their contribution should be theirs to direct what liability it covers.
Maybe we should make the liability equally owned by the union member based on their level of contribution since inception. I would love to pass on that portion of the liability to the union as a taxpayer.
What has not been brought up during this whole discussion is that the City has not paid into the Fire or Police pension funds in over a decade. The Union Members pay into the fund and solely through wise investment at this point in time it's over funded. Something eles you might want to note, in regard to the both of these funds the City has NEVER paid a dime in social security for any of they're Members...Wanna try figuring out just how many MILLIONS that has saved the City and it's Tax payers? So for the Unions to ask for additional benefits when the City wants to use this Pension money help cover the costs of a Health care program is not greed, it's called bargaining in good faith. These "Union Hacks" will also not recieve any Social security benefits unless they have had some previous employment . So lets stop calling the pension funds "Tax payer Money" because that's simply not the case.
Here are the contributions to each fund between 1982 and 2005 from both the city and the employees in that fund:
GENERAL CITY
Employer (54%) Employee (46%)
POLICE
Employer (86%) Employee (14%
(Taxpayers put in $27.3 million while employees put in $4.6 million)
FIRE
FIRE Employer (83%) Employee (17%)
(Taxpayers put in $14.3 million while employees put in $3 million.
That also means the Union members have never had to pay into Social Security also. It still cuts both ways.
I think that what the unions really want is to have oversight of the funds designated as health care. Too many cities around us have had their pension funds raped by self serving politicians that have not always had the taxpayers interest in mind, regardless of what they say!! Allowing those affected to have some say is most certainly the basis upon which this country was founded!
The unions cureently have a say and in fact on the Retirement board every Union has representation. Seeing as these funds would be still in the pension plans they would have the same say as to how the monies are invested and controlled. I believe the unions want life time health benefits to let this happen. That just compounds the problem and we should just walk away as taxpayers if that is their demand and then work at reducing the cost and benefit level of the healthcare retirees get.
Union members are the BEST politicains!
I am so happy people are finally seeing the light on this. It looks like people are becoming informed. Good arguments are being made both ways. I personally side with moving the money, but I understand both points of view.
10:13
YOU are the best politician!
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