The first firm proposal put forth to stabilize Chattanooga's public safety retirement fund and rein in spiraling costs would save the city $126 million over the next 25 years.
However, city spending would still rise under the plan, according to The Segal Co., actuary for the Police and Fire Pension Board that oversees the retirement fund. The board has proposed imposing a minimum retirement age of 50, raising employees' contributions to the fund by 1 percent and reducing cost-of-living adjustments.
"I think it's a compromise," said Chris Willmore, the pension board's president. He described potential changes to the pension plan as "emotional," but said "we have to look at it from the facts and figures."
Nearly 100 police officers and firefighters packed Monday night's meeting of Mayor Andy Berke's 18-member pension task force expecting to perhaps hear the next proposal. Instead the pension task force heard The Segal Co. report but didn't talk about specific benefit changes. That upset several people in the audience on the fourth floor of the Chattanooga library.
"I'd like to know the mayor's proposal. I think he's distancing himself from this," said firefighter Richard Meier, as the crowd erupted in applause.
Berke's Chief of Staff Travis McDonough said after the meeting that it is premature to talk about one plan without all the facts in front of the task force. He said criticism of the mayor is misplaced because this process has been the most public discussion on pensions that an administration has overseen.
"We're not looking to have a back-and-forth negotiation. It's about everybody coming to a consensus solution," McDonough said. "And we're still making progress."
This was the third task force meeting since Berke announced in July that the pension fund was unsustainable, hired a consulting firm, the PFM Group, and appointed the 18-member task force. The task force's orders were to: attract and retain employees, meet obligations to members and use taxpayer funds responsibly.
Nine weeks remain until Berke's Dec. 31 deadline to examine the pension plan and address its $150 million shortfall.
To reach a consensus by then, consultant Vijay Kapoor of PFM said the task force will have to begin to meet more frequently and in smaller groups over the next month to try to work out an agreement. The Segal Co. also has been asked to look at how the city's contribution would change if employees paid more into the plan.
One of PFM's first findings is that Chattanooga's police and fire pensions are among the richest compared to those in 14 other Southeastern cities, including Nashville, Knoxville and Charlotte, N.C.
The board that oversees the fund made the first move earlier this month, suggesting its benefit changes at the last task force meeting.
While the city would save money under the board's proposal, the city contribution would still rise over time until the plan is fully funded in 2038.
The city is projected to pay $14.4 million next year, about a 38 percent contribution. The board's changes to the plan would drop the contribution to 30 percent, but it would still climb until reaching 41 percent before dropping to a maintenance level.
If no changes are made, the city is projected to spend $724 million over the next 30 years to make the plan fully funded. The proposed changes to the plan would reduce the city's contribution to $598 million, according to The Segal Co.
Contact staff writer Joy Lukachick at firstname.lastname@example.org or 423-757-6659.