Parkersburg eyeing change to control pension costs
PARKERSBURG — The Finance Committee of Parkersburg City Council will consider closing the existing municipal police and firefighter pension funds to future hires to bring rising costs under control at a meeting at 5:30 p.m. Monday.
If approved by the full council, no one currently paying into the funds or receiving benefits from them will lose their pensions and future employees’ pensions would be part of the Municipal Police Officers and Firefighters’ Retirement System, Finance Chairman John Reed said.
“They aren’t cutting anybody off that currently has it or their survivors,” he said.
The meeting will be held in the small conference room on the second floor of the Municipal Building. A representative of the state Municipal Pension Oversight Board will be in attendance to present the city’s options and answer questions.
Parkersburg Finance Director Eric Jiles said closing the pension funds, as cities including Charleston, Huntington, Moundsville and Wheeling have, would let the city fund them differently and address unfunded liabilities that currently stand at approximately $47.5 million for the Fire Department and $46 million for police.
“We would see an initial increase in the amount of (annual) contributions the city would have to make,” he said.
However, those would eventually taper off, whereas under the current system, annual combined contributions for the two funds are on pace to double from about $4.4 million in the upcoming 2017-18 fiscal year to $8.8 million a decade from now, Jiles said.
Under state law, the city is required to contribute 107 percent of the previous fiscal year’s pension payment. That just barely covers the benefit payments from the firefighters’ pension fund, Jiles said, while the city must pay an additional $300,000 to meet the current year’s police pension obligations.
Even when the city does contribute more than the required amount, it doesn’t change the 107 percent requirement for the following year, Jiles said.
But by closing the pension plans to new members, the city can change the funding method and “begin amortizing the unfunded liability in a manner that’s more controlled and consistent with actuarial studies,” he said. Without new employees coming on, the unfunded liability would not grow, Jiles said.
Payments will likely go up as the city meets the year’s obligations and pays amortized amounts on the unfunded liability, but that approach will reduce that liability and remove the mandate for continually increasing payments, Jiles said.
Under the current plan, new employees contribute 9.5 percent of their gross wages to the pension. If the city moved to the state plan, the employee contribution would be 8.5 percent, which would be matched by the city, Jiles said.
Reed said he’s not sure whether the Finance Committee will take any action to refer the matter to the full council Monday or just use the meeting as an informational session.