Brushing aside claims that tapping excess city pension cash could save taxpayers millions, a panel investigating the issue recommended Tuesday that officials put the idea aside for now.
Three of the GASB 45 Committee’s members voted against shelving the concept, but all four of the municipal union members serving on the panel said they want to stick with the status quo for the time being.
Mayor Art Ward said the panel’s choice makes sense give the turbulence in the stock market these days. But, he said, that if the funds become flush again, the proposal would be viable.
“It’s always going to be a topic of consideration,” Ward said.
Union members said they’re not necessarily opposed to using small amount of surplus pension cash to help pay for the health care of retired city workers.
But, they said, they don’t want to risk undermining the three pension funds that still hold tens of millions of dollars more than the city anticipates it will need to pay off pension promises, even after the wild plummet of the market during the past six months.
“We all know the economy is drowning,” said city Finance Chairman Rich Miecznikowski, one of the three committee members who wanted to push ahead with the idea of using the excess money.
“It would go a long way with helping us with the mill rate,” Miecznikowski said.
T. J. Barnes, the panel’s chairman, said that Bristol and many other levels of government have “made a lot of promises” to government workers “and we don’t necessarily fund those promises properly.”
Though Bristol has done a stunning job of funding pension obligations – it’s one of the best funded municipal pension plans in the country – it hasn’t set aside much of anything to pay for a decade’s worth of health care guaranteed to retired city employees.
Comptroller Glenn Klocko said there is $1.4 million earmarked for the fund, but he hasn’t yet moved the money into an irrevocable trust to begin creating a cushion for the future.
He said he wanted to see what would happen with the GASB 45 issue first, because if the city used surplus pension cash, it could use that money for something else.
Barnes warned that if the city can’t figure out how to get the $72 million or more it will need to pay future health care claims – a figure that rises annually – there’s always a chance it will be forced to renege on the deal.
“If people can’t hang on to their homes,” Barnes asked union officials, “then how do we pay for your health care?”
“It’s one thing to promise to pay something. It’s another to pay it,” Barnes said.
But several union officials said they have tried over the past decade to work out a deal with the city to start funding a health benefits fund that would begin to set aside the necessary funds. The city hasn’t been willing to take the proposals seriously, they said, so they never got anywhere.
There is still a chance the City Council will take up the proposal despite the GASB 45 panel’s recommendation. There are at least two councilors who want to pursue it.
What is GASB 45?
It is a reporting requirement that calls for cities and towns to lay out the post-retirement employment costs they have taken on. It also asks that they say how they intend to fund the expense.
There is no rule that municipalities take any concrete action, but Bristol officials say they don’t want to ignore the problem and stick taxpayers in a decade or two with massive bills for costs that could be dealt with sooner.
Contact Steve Collins at firstname.lastname@example.org