Council raises pension funding questions amid budget shortfalls

Council members and staff devoted part of the budget discussion to the city pension plan and the size of the annual employer contribution. Several council members said the retirement fund — described as historically well funded — represents a large recurring general fund outlay and asked for options to manage the long-term liability.

Why it matters: Pension contributions are a structural recurring expense that reduce fiscal flexibility. Councilors noted the city’s contribution this year is a material line item and asked staff to consider alternative approaches for future hires or phased changes that would lower near-term cash contributions while respecting current retirees’ earned benefits.

Details: Councilors and staff discussed options used in other jurisdictions — including requiring employee contributions for new hires or moving new employees to a defined-contribution plan — and asked the city’s actuary to provide updated valuation and funding scenarios. Staff cautioned that amending benefits for current employees raises legal, contractual and vesting questions and that changes may shift recruitment and retention dynamics.

Next steps: City staff agreed to commission or obtain a current actuarial study and prepare options and implications for the council, including transition approaches for new hires and communication implications.