Council approves pension obligation
City Council passed a minimum municipal pension obligation of $4.3 million Thursday for its police, fire and officer and employee unions.
That’s $100,000 less due to the fire department unfunded liability getting paid off, said William E. Nichols Jr., city finance director.
The police department pension is $1.8 million; fire is $1.3 million and officers and employees is $1.2 million, he said.
The city receives $1.3 million from the state toward its pension obligation, Councilwoman Liz Miele noted. That means the overall pension obligation at this time for next year is about $3 million, she said. That equates to 12 1/2 percent of the proposed general fund budget, Miele said.
“It’s one piece of the proposed 2020 budget puzzle,” Nichols said. The other unknown cost is health care and salaries, he said.
“It’s a good thing,” he said, of the $100,000 less in pension obligation than this year.
The city’s pensions are about 90 percent fully funded, Nichols said. “We’re top rated.”
If the fund was fully funded the cost per year would be about $2.5 million, Nichols said. The state contribution of $1.3 million would mean it would cost the city $1.8 million to fund pensions, he said.
The pension calculation was from evaluation in 2017.
The city pension fund remains solid and solvent but there is some catching up to do, Nichols said.
The calculation for the minimum municipal pension obligation is a combination of expected normal costs, administrative costs and the unfunded liability, or what finance calls “mortgage.”
“I call it that because it’s kind of like that,” he said. “Whenever the assumption doesn’t meet what the return is in investment, there is costs that drive up pensions,” he said.
In other action taken, the council:
• Tabled creating an ordinance renaming College Place to Warrior Way, reference to the Lycoming College address and its Warriors teams.
• Approved a resolution to authorize an easement agreement between the city and McCormick Associates for providing parking space to visitors of Way’s Garden.