Funding irks Soldotna manager

Boedeker says state penalized city for advanced payments to PERS account

Posted: Thursday, May 31, 2007

Legislators from the Kenai Peninsula are not accepting the charge that they short-funded the city of Soldotna during the first session of the 25th Legislature.

City Manager Tom Boedeker thinks otherwise.

During last week’s meeting of the Soldotna City Council, Boedeker said, “Soldotna really got shafted in capital funds. We got $25,000 for capital.”

He also said the city is being penalized for advanced payments it voluntarily made to pay down the city’s unfunded liability in the Public Employee Retirement System (PERS) account.

Two years ago, when Alaska municipalities learned that through an accounting error, the state provided them with erroneous amounts they needed to contribute to PERS, Soldotna took $1 million out of savings and paid it into its PERS account.

That year and the following year, when the state paid Soldotna 5 percent of its payroll to cover the mandated increase in its PERS rate, Soldotna chose to pay that amount into the unfunded liability.

Before the Legislature adjourned for the summer last week, it appropriated $185 million essentially to limit the amount cities need to pay into PERS to 22 percent of payroll.

Boedeker said the appropriation does not recognize Soldotna’s extra contributions.

“The legislative action on PERS penalizes the city of Soldotna for the extra payments made to reduce the unfunded liability,” he said in a memo to the city council.

“They will get recognized for it,” said Rep. Kurt Olson, R-Soldotna, from his Kenai office Wednesday.

“This is the first year of a two-year session,” Olson said.

In fact, the Kenai Peninsula’s Sen. Tom Wagoner, R-Kenai, Rep. Mike Chenault, R-Nikiski, and Olson worked to pass SB 125, which would have compensated municipalities — including Soldotna — that paid in surplus amounts to PERS.

“There was what we called a ‘heroes list’ ... that was in the original bill,” Chenault said.

“At the end of the session, we decided to fund the PERS/TRS (Teacher Retirement System) issue and next session we will fund the heroes list,” he said. “Soldotna will get their money back.” Chenault said he believes 26 communities throughout Alaska paid 5 percent more than the 5 percent they received from the state to offset PERS/TRS rate increases.

“The peninsula delegation supported (SB) 125 and we continue to support it. And, we’re working on it in the interim,” Olson said.

In addition to receiving the PERS aid by way of holding the rate at 22 percent, Wagoner said, “The state’s giving them revenue sharing on top of that.”

Because of high oil prices, the Legislature appropriated $48,720,000 from the general fund to municipalities and unincorporated communities to defray increased energy costs.

Soldotna will receive $253,847 of that.

Boedeker acknowledged that amount, but said Soldotna only received $10,000 in capital project funds for bear-resistant trash containers and $15,000 for wheelchair accessible ramps and curbs at three locations in the city.

“They did much better than that,” Olson said.

“He’s probably not counting the $4 million for road work from Mackey Lake Road into town and (Kalifornsky) Beach Road work near the college,” he said.

Olson also pointed to two Soldotna school capital projects being funded in the state budget: $75,000 for Soldotna Elementary School roofing and $37,500 for the Soldotna Middle School gym.

He said he believes Boedeker is viewing the roads funding as state Department of Transportation and Public Facilities projects and the schools funding as Kenai Peninsula Borough School District projects rather than Soldotna city projects.

“The capital projects are inside the city limits,” he said.

On Tuesday, Boedeker said the city had submitted a capital project priority list to the legislators that sought $609,000 for drilling water wells and building well houses along Funny River Road; $2,475,000 to extend water mains along Funny River Road; $500,000 for a sewer lift station; $396,000 to install water mains and sewer lines along Robin Street; $560,000 for water and sewer mains along Soldotna Avenue; $340,000 for library expansion design; $2.3 million for water, sewer and road work in Centennial Park; and $300,000 for a city cemetery.

Wagoner said repaving Funny River Road and roadwork on the Sterling Highway from Mackey Lakes Road into Soldotna “were his two priority jobs when we took a ride (through Soldotna) last fall.”

“It would really be nice to fund everything, but we can’t. He knows that,” Wagoner said.

Boedeker said he has not had the chance to talk with Olson and Wagoner since the Legislature adjourned, and Olson said he wants to meet with the city manager to discuss his disappointment.

“My biggest concern is what didn’t happen with PERS,” Boedeker said.

He said he believes paying the additional $1 million into PERS two years ago was fiscally prudent, but, in hindsight, he would not recommend doing it again.

Phil Hermanek can be reached at

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