Council considers handling of AT&T settlement funds
Jennifer Muzinic
Posted online
As Springfield City Council put to bed two Police and Fire pension issues Jan. 25, another fund-related ordinance was read for the first time. After a lengthy discussion, council members established a nine-member police-fire pension board. It also approved the creation of the Citizens’ Sales Tax Oversight Committee, which will be charged with reviewing and monitoring the O-cent pension fund sales tax revenues. That committee also may be asked to look into an issue that stems from a decision the city made in 2006. At last week’s meeting, council considered an ordinance that would put $7.45 million in settlement proceeds from a lawsuit between the city and AT&T Missouri into the pension fund. But if council passes the ordinance when it comes up for a vote on Feb. 8, members will be acknowledging that the city’s decision to close the Tier 1 portion of the pension plan contributed to a greater financial burden on Tier 1’s Additional Funding Contribution, the cost of which was intended to be covered by employees. It also would ask the tax oversight committee to take a closer look at the impact that decision had on the AFC and determine whether part of the AT&T settlement should be designated as an asset to fund some of the AFC. The AFC stems from a 2000 agreement between the city and Tier 1 Police and Fire employees, when the employees requested an increase in benefits and agreed to cover the cost. The employees initially paid an additional 2.8 percent of their average salaries into the AFC. Every five years, an actuary reviews the AFC and adjusts the amount of money that needs to be paid to fully fund the program. “The assumption was that there would be enough new hires to cover the costs,” City Manager Greg Burris said. When the city decided to close the Tier 1 plan in 2006, however, it increased the burden on the AFC because new employees weren’t enrolling in the plan while a number of employees were retiring or leaving. The first actuary review since the plan closed was conducted June 30, 2009, and the city asked the actuary to put together two evaluations: one under the assumption that the plan hadn’t been closed and another with the assumption that the plan was closed. The difference between the two plans is an increase of 2.77 percent. “The question is does the city own this obligation? If the answer is yes, then should we pay it off over the course of 20 to 30 years or in a lump sum?” Burris asked council, noting that passing the ordinance would keep the question open until the tax oversight committee could consider the issue and make a recommendation to council. The nine-member police-fire pension board will consist of six citizens, a Police employee, a Fire employee and a Police or Fire retiree. Another ordinance proposed an 11-member board. The citizen makeup includes two professionals in financial or investment management, one actuarial or auditing professional, one each in the medical and legal fields, and a citizen-at-large. Councilman Dan Chiles noted that the citizen board members were invested in the pension fund as taxpayers. “It’s all a big pile of money contributed by the taxpayers. If the money goes away, the taxpayer is still on the hook,” he said.
This installment of Springfield Business Journal’s Architects & Engineers Project Report showcases 26 endeavors by area design and engineering professionals.
