18 - Firefighters Relief & Retirement Fund -Pursue a Pension Bond - Freeze Fire Pension - Transfer Employees to TMRS

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stories from large metropolitan areas that have had to make drastic changes to their benefits due to insurmountable costs to sustain their pension funds. This often has unfortunate consequences for the men and women who worked their entire career for their retirement pension. In December 2020, we learned that there was legislation being considered to amend the TLFFRA to force cities to dramatically increase their contribution amounts to address this growing issue. Such a change would present challenges because other legislation has placed caps on the city's ability to raise funding each year. To our knowledge, the legislation never went anywhere, but it is reasonable to assume that someday the legislature could actually pass this or something similar which will take effect whether we are prepared for it or not. In November 2021, we met with the Board of Trustees to get an update on the Pension. The Pension's actuary had just completed a study to incorporate the substantial pay increases that the Fire Department had been given starting in October 2021 to see if this made an impact. While the fund was still at 29% funded, and while we still needed an approximate $16 million to be fully funded with only $5 million in the fund already, the pay increases did shrink the "fully funded" trajectory from 33 years down to 23 years. This is of course a significant improvement. But I was then educated on another key component in this equation. Our trajectory to a fully funded status assumes that the retirement benefit payout itself will not change. In the early 2000s, the Board of Trustees voted to set the benefit payout at $94 multiplied by your number of years of service, per month. Therefore, if you worked 30 years (in any position/s), you will be paid approximately $94 x 30 years of service x 12 months = $33,840.00 each year. If the Department voted to increase this formula, it would increase the unfunded liability and thus push out our fully funded status. This would also require an increase to the annual contribution by both the city and firefighter. Currently the employee puts in 16% of their pay as contribution while the city puts in 14% (total of 30%). This contribution, along with the current balance of approximately $5 million in the fund as an investment, is what is currently keeping the fund afloat. However, I also learned that we are spending more annually on benefits to current retirees than we are bringing in through collection. Therefore, our trajectory will not be accomplished without an increase in the contribution and/or a large deposit of funding in to the Pension fund by the city. In addition, the benefit payout bears no relation to the amount of contribution you place in. Whether you make higher rank pay or lower rank pay, you will still receive the same benefit amount for the same number of years of service. With the above information in hand, and after discussing this with our team, I reached the following conclusions: 1. Under our current mode of operation, it is unlikely we will ever reach a fully funded status. 2. To simply deposit a large sum of money in to the fund requires a) money the city does not have without issuing long term debt and b) accepting that in a few years, this process might need to be repeated. 3. Reaching a fully funded status hinges on the department not increasing their benefit payout