Springfield city leaders have been in a long and heated battle with the books, hoping to overcome a multimillion dollar deficit in the city’s Police and Fire Pension Fund.
The pension shortfall, which took more than a decade to boil over, was sparked by an increase in employee benefits in the 1990s and fueled by overly conservative investments, a stock market decline and the city’s decision to under-fund the program from 2004-07. By January 2009, the fund’s roughly
$295 million obligation was shy by nearly $200 million.
In May 2006, city leaders decided to make changes to the pension fund to address an already-serious shortfall. The plan was funded at 52 percent: a healthy level is around 70 percent. The changes amended the minimum retirement age needed to receive maximum pension and eliminated the cost-of-living allowance, but did little to stop the bleeding.
In February 2009, another attempt was made to address the problem, when officials, led by City
Manager Greg Burris, asked voters to approve a 1-cent sales tax, which would be dedicated to the pension fund. If it passed, city leaders predicted the fund would be covered fully in five years. It failed.
Following disappointment at the polls, the city created a citizen-run Police and Fire Pension Fund Task Force, tasked with finding alternative means to cover the shortfall. A series of suggestions were offered, including putting new hires into the state’s Local Government Employees Retirement System instead of the pension fund. Even with the implementation of those recommendations, the task force recognized a sales tax would be necessary. In November 2009, a three-quarter-cent sales tax was approved by 54 percent of voters. The tax, expected to generate more than $20 million for the fund during the next five years, began in April. After five years, voters will have the chance to decide whether to let the tax sunset or let it continue.See the full list of pivotal points chosen by the Springfield Business Journal here.