Retirement costs: City, county grapple with funding increase in employer portion of PERS
Published 5:03 pm Saturday, August 11, 2018
When the Board of Mayor and Aldermen begin their budget discussions Aug. 16, the increase in the city’s contribution to the employees’ retirement under the state’s Public Employees Retirement System will be a topic for discussion.
Under the city’s plan, the city presently contributes 15.75 percent toward an employee’s retirement, with the employee contributing 9 percent.
According to the city’s financial statement in the 2016 audit, the most recent figures available, the city paid $3.375 million — which includes the employees’ share — to PERS.
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And when the 1.65 percent increase in the employer contribution to PERS approved by the Legislature goes into effect July 1, 2019, the city’s share will increase from 15.75 percent to 17.40 percent. The city’s share of its contribution into employees’ retirement is estimated to increase by $276,000 per year.
The employee portion paid into the retirement fund will not increase; it will remain at 9 percent.
“It’s going to be a cost we didn’t expect, and we’re going to have to calculate it into our budget going forward,” Mayor George Flaggs Jr. said.
“I want to let the people know that while we give (employees) a 3 percent raise, we still have to calculate their retirement, social security and retirement to us, and I think it averages anywhere from $11 to $13 per employee,” he said. “So whatever you think you make an hour, you can put $11 to $13 to it.”
Flaggs said the city has 532 employees.
“Because of that high number of employees we have with the city in proportion to our budget, we can’t give those higher percentage of raises,” he said. “We have to cover their retirement. That’s what people don’t see — the cost effect of the pay increase, and once you give those pay increases, you have to continue to give them.
“It’s not a one-time cost. It’s a reoccurring expenditure to the budget and to the taxpayers, too.”
County prepares also
The Warren County Board of Supervisors is also in the midst of their next fiscal year budget and the increase in PERS will play a role.
But County Administrator John Smith points out the full impact of the increase in the county’s obligation won’t take effect until the 2020 fiscal year budget.
Smith said the cost at the present rate at the present pay scale will be $137,900 more a year for the county.
The increase cost is expected to be $37,312 in the last quarter of the 2019 budget year.
He said the county currently pays $1,316,089 per year into the retirement system.
“It will cost us $47,000 more in 2019 than what it is costing us right now,” Smith said.
Asked what impact the county budget will feel, Smith said it really depends on the tax assessments for the next year.
“It depends on what the tax assessor values property at and if we have to go up, or not adjust at all,” Smith said. “We may have some growth. You never know what comes on the tax rolls each year.”
Editor Rob Sigler contributed to this report.