Police and Fire pension contribution to rise to $224M; actuarial assumption changes cited
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Summary
Tim Johnson told the Finance Committee the city's Police & Fire pension contribution for the next fiscal year will be $224 million, citing a quarter-point reduction in return assumptions and updated mortality and salary assumptions as key drivers; auditors said some of the forecasted increases will affect multi-year budget projections.
Tim Johnson, presenting on behalf of the Police & Fire Pension Fund, told the Finance Committee the city’s required contribution for next fiscal year will be $224,000,000, up from $201,000,000 this year.
Johnson said that without the surtax legislation the contribution would have been approximately $346,000,000 — a difference of roughly $122,000,000 he attributed to surtax financing. He described the main drivers of the year‑over‑year increase as a lower return assumption (from 6.5% to 6.25%), updated mortality assumptions as members live longer, and recent salary increases tied to collective bargaining.
"That number is $224,000,000," Johnson told the committee when presenting the headline contribution figure. He added the change from 6.5% to 6.25% increased the contribution by about $14,000,000, while switching from a gross to a net return assumption produced a $17,000,000 offset, yielding a net change materially smaller than the gross adjustments.
Johnson also said the fund’s liquidity ratio was about 9.88 to 1, which he characterized as precautionary strength in the near term. Councilmembers and auditors asked technical questions about how the actuarial changes should be reflected in the city’s multi‑year B3 forecast; auditors said schedules tied to the actuarial report add roughly $25,000,000 to previously modeled deficits in out years.
Committee members expressed concern about the budgetary impact of actuarial choices and discussed the council’s role in appointments to the pension board and oversight of assumptions used in budgeting.
