Joe McMenamin
This week I reviewed the 2 most recent Springfield Police and Fire Pension Fund Actuarial Reports, dated 7 Dec 2011, which I can email to you if desired.
Springfield Police Pension Fund 2011 Actuarial Report… (download as PDF)
Springfield Fire Pension Fund 2011 Actuarial Report… (download as PDF)
These reports paint a pension picture worse than what I discussed at the most recent Council/Committee of the Whole meetings.
During the most recent 12 month reporting period, the unfunded liabilities for these two funds grew by a combined $30 million – from $174 million unfunded liability FYE Feb 2010, to $204 million unfunded liability FYE Feb 2011.
When the SJR devoted an editorial to this subject back on Jan 10, 2010 two years ago, the combined unfunded liability for both pensions stood at $162 million. It is now at $204m, and the “percentage funded” has declined further.
When the SJR wrote on this subject two years ago, it concluded the problem was fixable.
And it still is.
But what is alarming now, two years later, is that the growth in unfunded liability, in the % of unfunded liability, and in the annually required actuarial contributions to the funds, took place despite state law changes to ameliorate those problems, most notably the General Assembly’s revised amortization period for underfunded downstate police and fire pension funds. The GA eased the catch up period from 100% in 2033, to 90% by 2040.
There is more bad news to come. Eventually we will need to revise the overly optimistic 7.5% actuarial investment rate of return for our Police and Fire Funds. This will have 2 adverse effects to the City. It will increase the total amount of unfunded liability, and will increase the annual required amount the City must pay into the funds.
Our City budget is precariously weak, and remains in the high danger zone for a number of reasons, apart from the unfunded pension liabilities. These include the revenue assumptions behind CWLP’s new coal power plant, and potentially costly new environmental regulations. Other reasons include our current union wage agreements (some 5 years at 4% raises), and the Fire Union Contract which takes management control from the City. Persistently weak economic and tax revenue forecasts remain. This is not about optimism or pessimism, but realism and caution. A table follows.
Respectfully,
Alderman Joe McMenamin
Ward 7 – Springfield
217-787-2297
JoeForWard7@aol.com
Springfield Police/Fire Pension Funds
| As of | Police unfunded liability (millions) and % funded | Fire unfunded liability (millions) and % funded | Combined unfunded liability (Police and Fire) in millions |
| Feb 28 ‘07 | $50.1 65.2% | $65.3 55% | $115.4 |
| Feb 28 ‘08 | $72.9 57.6% | $89.3 49% | $162.2 |
| Feb 28 ‘09 | $73.1 57.9% | $85 50.4% | $158.1 |
| Feb 28 ‘10 | $79.9 57% | $94.6 49% | $174.5 |
| Feb 28 ‘11 | $92.8 54.6% | $111.8 46% | $204.6 |
Prepared by Alderman Joe McMenamin based on Actuarial Valuation Reports of Goldstein & Associates dated Dec. 7, 2011.
Joe McMenamin for Ward 7 