Police and Fire Pension Funds Face Insolvency

by Mark Friedman  on Monday, Sep. 17, 2012 12:00 am  

But Clark said the options for increased revenue are limited now.

The main sources for the closed pension funds are contributions from members, which are matched by their cities, a tax on insurance policies and investment income.

In 2011, the PRB and LOPFI lobbied the Legislature to change the insurance tax distribution formula for pensions in both plans, Clark said.

That resulted in $31.3 million for the pensions in 2012, up about $1 million from the previous year.

The cities also could contribute more to the plans. But, Clark said, “I think people realize that cities are pretty strapped right now.”

Solutions

For the closed local pension plans that have already consolidated with LOPFI but are still faced with unfunded liabilities, help could be on the way if Amendment 2 passes in the November election.

If that is approved, cities and counties could issue bonds to retire the unfunded liabilities of the closed police and fire funds. Sales tax proceeds would be used to repay the bonds. Those cities that still administer police and fire plans couldn’t take advantage of the proposal.

The Municipal League supports the passage of the amendment.

Zimmerman also suggested that cities ask their residents for millage increases to support the pension funds.

“All this is designed to be some solutions and not take benefits away from existing employees but to make [the funds] more stable in the long run,” he said.

Some cities are taking steps to improve the financial situation.

 

 

Please read our comments policy before commenting.