Council enacts Police, Fire pension changes

The pension bill – one item on a busy council agenda – changes the benefit plan for new employees hired after June 1 while not affecting the benefits of current Police and Fire employees.

The changes, which affect only new hires, set the minimum retirement age needed to receive maximum pension benefits at 55 with 30 years of experience, move the multiplier from 2.8 to 2.5 and eliminate the cost-of-living allowance.

The changes come as a result of a large funding shortfall – the plan is currently funded at 52 percent while healthy levels are around 70 percent.

During discussion before the vote, Councilman Conrad Griggs pointed out that the average current employee, who will see no cut in benefits, will receive nearly 90 percent of his average salary with 30 years of time served.

“This is their plan – it’s not a pipe dream. This is what they have,” he said. “I don’t know of anybody in corporate America that has a pension like this.”

Councilman Gary Deaver said that it would cost about $45 million to bring the plan to 70 percent funding, while the city’s fiscal year 2006-2007 budget – which had its first hearing during the meeting – only has $90 million available in the general revenue fund. He added that it would take some “home runs” from the plan’s investments to keep the plan financially solvent.

Other council members compared the situation to what has happened in corporate America and its company-funded pension plans since Sept. 11, 2001.

“I’ve got a friend who worked at United Airlines for seven years,” Councilwoman Mary Collette said. “He’s already taken a 48 percent pay cut. His pension was supposed to be $900 a month – now … it’s $14.30 a month. We’re doing the best that we can to make sure that we protect the benefits that (the Police and Fire employees) have while protecting the other 1,000 employees that we have.”

A new budget

The pension item came on the same night that council had first reading on the city’s fiscal year 2006–2007 budget.

The new budget, which totals about $236 million, is down about 1 percent from the 2005–2006 budget, though it is up 6.5 percent from 2004–2005.

The proposal contains several increased expenditures, due mostly to a projected 3 percent increase in sales tax revenue, which provides about one-third of the city’s annual revenue dollars.

The spending increases include $562,000 more in city funding for the Police and Fire pension plan, according to Assistant City Manager Evelyn Honea.

The city also is dealing with increased fuel costs; $250,000 has been allocated for fuel costs in departments including Police and Fire where the rising cost of gasoline has caused operating costs to balloon.

Say cheese

Council also considered a resolution supporting a request for personal property tax abatement at Kraft Foods Global Inc.’s Springfield facility.

Kraft is applying to the Missouri Development Finance Board for a 50 percent personal property tax abatement on new equipment the company hopes to add to the factory. The company, according to Plant Manager Joe Metzger, has preliminary plans to invest as much as $75 million in new equipment.

The abatement would mean a loss of $2.16 million over three years in state tax revenue, though Metzger said it wouldn’t be an issue.

“I have met with all of the key tax recipients, and they’re very supportive,” Metzger told council. “We had terrific meetings with (Springfield) R-XII (Schools), (Ozarks Technical Community College), the library system, the county and so forth, and all have been supportive.”

City Economic Development Director Mary Lilly Smith said the abatement is in line with abatements offered to other companies such as Digital Monitoring Products and The Maiman Co. in the Partnership Industrial Center and Executive Coach Builders in PIC West.

If the resolution is approved at the May 29 meeting, the city manager would send a letter supporting the abatement application to the Missouri Development Finance Board.[[In-content Ad]]