A proposal to reform the city of Atlanta’s underfunded pension plans could come within 10 days.
Mayor Kasim Reed on Wednesday told members of the city council that after weighing seven options and continued consultation with them, he is close to announcing his plan to shift the funding formula.
“I don’t think we can wait any longer,” Reed said. “You can’t get around the math related to this problem.”
Since coming into office, Reed has argued that the city’s pension has handcuffed Atlanta’s ability to remain financially viable since more than 20 percent of the annual budget is consumed by it.
While other big cities contribute 20.8 percent of each employee’s salary toward pension benefits, on average, Atlanta contributes 39.1 percent.
Only 53 percent of the plan’s liabilities are funded, and since 2001, annual pension costs have gone from $55 million to $125 million.
Reed said at the current pace, without any changes, Atlanta’s unfunded pension liability could reach $4.5 billion over the next decade.
“Now we have a disaster,” Reed said. “We have data that is irrefutable, based on past performance, that we are going broke. I want the checks to clear, I want us to be 80 percent funded and I want the employees to be treated better than they ever been before.”
A panel appointed by Reed presented seven options for improving the pension system.
Reed would not say how he is leaning, but added that a new plan would likely include Social Security, which city workers currently do not receive or pay taxes toward.
“Every other government in our region has already made these modifications,” Reed said. “When Clayton County has a pension that is more funded than ours, then action is required. All seven options are about the future, not the past. We are not going into your house and trying to take what you have.”
City workers resist changes.
Jim Daws, president of the Atlanta Professional Fire Fighters Association, said he believes any changes would not only hurt city workers, but cost taxpayers more.
“Defined contributions cost more. Social Security costs more,” Daws said. “We have a pension plan that is very advantageous to the taxpayers and provides a measure of retirement security for the workers. Those other options will provide [fewer] benefits and cost the taxpayers more.”
Daws said that city workers are prepared to sue if the city changes their pensions.
There have been questions about whether several members of the city council who are in the defined benefits plan should be able to vote on a plan that they could benefit from. Ten of the council’s 15 voting members would have to approve any change.
City ethics officer Ginny Looney has not offered an opinion butstate code suggests that they would be allowed to vote.
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