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04-17-2003, 03:30 PM
Ocala Star
Ocala OKs filling pension shortfall
Stock-based plans' value has declined
Published April 16. 2003 8:30AM
BY LASHONDA STINSON
STAFF WRITER
OCALA - City Council agreed Tuesday to chip in more money for city employee pension plans for the upcoming fiscal year.
Council members meeting in a budget workshop decided to increase the city's portion from nearly 8 percent to 12.5 percent of payroll, a 58 percent increase to the General Employees, Firefighters and Police pension plans.
Actuarial studies reflected that the plans are underfunded for fiscal year 2003 and would require the city to add more to the pension pot above the current level of 7.9 percent. The funds lost nearly $6.4 million last year, said Donald Corley, director of Finance & Administrative Services.
The staff recommended three options to address the shortfalls. The first alternative was to bond finance approximately 54 percent of the plans' unfunded liability, which would alleviate the problem for about five years. The second option suggested was to borrow enough money to "bridge the financial gap" for two years.
But Councilman Kyle Kay and Council President Kent Guinn strongly supported the short-term solution of raising the city's contributions.
"As painful as this option would be, we should address the issue now and address the issue based on current economic conditions," Kay said.
Before the presentation, City Manager Susan Miller estimated a deficit of $1.9 million for next year's budget, but after the decision to resolve the pension woes on a "pay-as-you-go" option, it grew to nearly $2.4 million.
"We'll balance that with new revenue. . . . It doesn't sound like I will be proposing the new ad valorem unless it's related to the ambulance service," she said. The ad valorem (property) tax is a significant revenue source for the city, accounting for 28 percent of the general fund revenue base.
Earlier this year, the city increased contributions by 1.25 percent of payroll - and those for police officers by 3 percent and the firefighters by 8.42 percent.
Randy Griffin, who has worked as a paramedic/firefighter with the city for 13 years, said the city made a good decision to increase their contributions.
"Our pensions are heavily invested in the stock market and when it does as bad as it's been doing, then that's what has to be done because the city is ultimately responsible . . . Once we leave, all we have is our pension and maintaining the funds on an actuarially sound basis is the wise thing to do," he said.
Miller said in an effort to "stabilize the pension funds," the upcoming budget will not include new programs, positions or salary increases. Also, routine capital outlays, such as computers and desks, have been suspended for fiscal year 2003-2004.
Funding the community's ambulance service also topped the city's list of budget sore spots. The city agreed to join in a four-way partnership with the county, Munroe Regional Medical Center and Ocala Regional Medical Center to help fund the service. Munroe Regional recently announced they would stop providing the service, which they have operated since 1976, by Oct.1.
Staff recommended only paying 17 percent of costs, which would amount to slightly more than $900,000. They believe this is sufficient since the city only represents 17 percent of the county's population.
"We don't know what the exact costs will be for ambulance service. We recommend that there be new revenue and not try to fund it in the current base because we've tightened it up so much," she said. "We've got a lot of work to do."
Miller said more budget workshops will be held before the final approval of the budget Sept. 30.
Lashonda Stinson covers city government. She can be reached at lashonda.stinson@
starbanner.com or 867-4129.
Ocala OKs filling pension shortfall
Stock-based plans' value has declined
Published April 16. 2003 8:30AM
BY LASHONDA STINSON
STAFF WRITER
OCALA - City Council agreed Tuesday to chip in more money for city employee pension plans for the upcoming fiscal year.
Council members meeting in a budget workshop decided to increase the city's portion from nearly 8 percent to 12.5 percent of payroll, a 58 percent increase to the General Employees, Firefighters and Police pension plans.
Actuarial studies reflected that the plans are underfunded for fiscal year 2003 and would require the city to add more to the pension pot above the current level of 7.9 percent. The funds lost nearly $6.4 million last year, said Donald Corley, director of Finance & Administrative Services.
The staff recommended three options to address the shortfalls. The first alternative was to bond finance approximately 54 percent of the plans' unfunded liability, which would alleviate the problem for about five years. The second option suggested was to borrow enough money to "bridge the financial gap" for two years.
But Councilman Kyle Kay and Council President Kent Guinn strongly supported the short-term solution of raising the city's contributions.
"As painful as this option would be, we should address the issue now and address the issue based on current economic conditions," Kay said.
Before the presentation, City Manager Susan Miller estimated a deficit of $1.9 million for next year's budget, but after the decision to resolve the pension woes on a "pay-as-you-go" option, it grew to nearly $2.4 million.
"We'll balance that with new revenue. . . . It doesn't sound like I will be proposing the new ad valorem unless it's related to the ambulance service," she said. The ad valorem (property) tax is a significant revenue source for the city, accounting for 28 percent of the general fund revenue base.
Earlier this year, the city increased contributions by 1.25 percent of payroll - and those for police officers by 3 percent and the firefighters by 8.42 percent.
Randy Griffin, who has worked as a paramedic/firefighter with the city for 13 years, said the city made a good decision to increase their contributions.
"Our pensions are heavily invested in the stock market and when it does as bad as it's been doing, then that's what has to be done because the city is ultimately responsible . . . Once we leave, all we have is our pension and maintaining the funds on an actuarially sound basis is the wise thing to do," he said.
Miller said in an effort to "stabilize the pension funds," the upcoming budget will not include new programs, positions or salary increases. Also, routine capital outlays, such as computers and desks, have been suspended for fiscal year 2003-2004.
Funding the community's ambulance service also topped the city's list of budget sore spots. The city agreed to join in a four-way partnership with the county, Munroe Regional Medical Center and Ocala Regional Medical Center to help fund the service. Munroe Regional recently announced they would stop providing the service, which they have operated since 1976, by Oct.1.
Staff recommended only paying 17 percent of costs, which would amount to slightly more than $900,000. They believe this is sufficient since the city only represents 17 percent of the county's population.
"We don't know what the exact costs will be for ambulance service. We recommend that there be new revenue and not try to fund it in the current base because we've tightened it up so much," she said. "We've got a lot of work to do."
Miller said more budget workshops will be held before the final approval of the budget Sept. 30.
Lashonda Stinson covers city government. She can be reached at lashonda.stinson@
starbanner.com or 867-4129.