Jamie Munks
The State Journal-Register
Before Springfield city leaders begin creating the next city budget, Mayor Jim Langfelder plans to convene a summit to begin the address the city’s formidable police and fire pension debt.
As of fiscal year 2013, the city’s firefighter pension fund was only 43.6 percent funded, and the police pension fund was 51.6 percent funded. Langfelder said he intends to come up with a strategy to begin chipping away at the multimillion dollar unfunded liabilities facing the city by bringing together lobbying groups, union representatives and consultants, among others with an interest in the pension funds.
Langfelder wants to get feedback from the groups and explore some of the remedies to resolve the issues before launching a specific strategy. But he said the bottom line is that the city needs to be doing more to chew away the unfunded liabilities.
A state law that went into effect in 2011 mandates that pensions must be 90 percent funded by 2040.
Ward 7 Ald. Joe McMenamin, who has been the most outspoken Springfield aldermen on pension issues in recent years, said he thinks Langfelder’s suggested approach of bringing together the those with an interest in the issue makes sense.
“From my point of view, we need a realistic plan,” McMenamin said, reiterating his criticism of the city’s estimated rate of return on pension fund investments, which he thinks is too high and has caused the pension debt to balloon.
McMenamin said he’s encouraged by Langfelder’s experience with the pension funds from his time as city treasurer. “He has a real inside understanding of the historical trends of our pension funds,” McMenamin said.
In fiscal year 2006, the city’s contributions to the police and fire pension funds were each about $4.4 million, combining to make up about 10 percent of the city’s roughly $85 million in corporate fund expenditures that year. The contributions have inched up in the past decade and in fiscal year 2015 made up roughly 16 percent of corporate fund expenditures.
Under Mayor Mike Houston’s leadership over the past four years, the size of the city’s workforce decreased by more than 8 percent, and city officials aimed to lessen employee wage increases in union contracts. But McMenamin has advocated for a more sweeping approach with a long-term strategy.
If the expected long-term rate of return on invested pension funds were decreased from 7.5 percent to 6.5 percent, the city’s required pension contribution would rise by $4.7 million, McMenamin said.
Langfelder acknowledged that the numbers are daunting when considering that even as the city puts more money toward pensions, the debts continue to grow, but he emphasized the need to find a way to decrease the city’s unfunded liabilities.
Langfelder said expects that the summit will take place by November, before city budget talks begin.
Joe McMenamin for Ward 7 