Kenai City Council members put a Band-Aid on an ailing public employee pension plan Wednesday night.
Though not a small sum, the $150,000 approved by the council for the city’s retirement account represents only 1 percent of Kenai’s unfunded liability.
The money, which will be drawn from $235,000 budgeted by the state for Kenai, will be added to $858,000 the city has earmarked for the Public Employee Retirement System (PERS) account.
The city’s unfunded liability in its PERS account is $11.5 million.
Earlier this year, city Finance Director Larry Semmens told the council that for years the city paid the PERS rate the state said the city needed to pay in order to fund the plan in accordance with actuarial projections.
Those projections, however, were wrong, leaving the city only 80 percent funded by 2002.
“By fiscal year 2010, the PERS rate will be 30 percent of payroll and will stay there for 25 years,” Semmens said. He said the total payroll for the city is approximately $5 million.
For fiscal year 2007, the city’s mandated contribution rate is 18.67 percent of gross wages, or $858,000.
In a memo to council members considering the coming year’s budget, City Manager Rick Koch recommended paying an additional $289,000 to PERS, plus the $235,000 budgeted by the state.
The combined total would have brought the city’s PERS contribution rate to 30 percent, the actuarially required rate to begin decreasing the unfunded liability.
“They had no interest in (the $289,000),” Semmens said Thursday, and chose to apply only $150,000 of the $235,000 to PERS.
After amending the proposed budget to add a $75,000 appropriation for employee health insurance and $50,000 for a branding program to promote the city, the budget was $162,000 in the black, according to Semmens.
Based on that information, council member Rick Ross suggested applying $150,000 to PERS.
He said other municipalities that have taken steps to pay down their unfunded liabilities have garnered little more than “an attaboy.”
His motion passed unanimously and the council then approved the city’s $15.1 million budget for the coming year.
© 2016. All Rights Reserved. | Contact Us