Fayetteville pension fund debate drags on despite attorney general input

FAYETTEVILLE -- The debate over how to save the dwindling pension money of 88 retired city police officers, firefighters and their spouses keeps going round and round.

Arkansas Attorney General Leslie Rutledge recently released an opinion saying the city should be able to add to the taxpayer-supported Policemen's and Firemen's Pension and Relief funds with money from the city's general fund, basically propping up the pensions like any other part of the budget.

By the numbers

Firemen’s Pension and Relief Fund

• Members: 47

• Average annual benefit: $27,400

• Range of annual benefits: $1,300 to $73,000

Policemen’s Pension and Relief Fund

• Members: 41

• Average annual benefit: $35,700

• Range of annual benefits: $4,800 to $95,000

Source: City of Fayetteville

Rutledge also said the City Council might be able to increase the 0.4-mill property tax going to each fund, though by how much is uncertain because of state law's limitation on property tax increases.

"That's real good news -- I'm going to do a little celebrating tonight," said Pete Reagan, a retiree and member of the fire pension board. "We've said all along that the liability belonged to the city."

But City Attorney Kit Williams said the safest option for the city remains a public vote on whether to increase the combined 0.8-mill tax, or $24 for the owner of a $150,000 home. He said the same thing a year ago, when the funds' fate was last in the spotlight.

"That's the way this is supposed to be financed," Williams said earlier this week.

The funds stopped taking new members in the 1980s after Fayetteville switched to the Arkansas Local Police and Fire Retirement System. For at least a decade, they haven't taken in enough revenue from investments and the tax to cover the $32,000 average annual member payment. Members get the pension instead of Social Security payments.

The fire fund will likely run out within a decade, while the police fund is in only slightly better shape.

The problem is a relatively small one -- the city this year employs about 240 officers and firefighters, for comparison -- but the debate over the funds' fates has gone on for years without resolution.

City Council members have been torn, saying the city should take care of its retirees but criticizing the boards' retiree members for raising benefits from 50 percent of ending pay to 90 percent over the objections of the mayor and city clerk, who are also on the boards.

The retirees have said the city is obligated to keep the funds afloat, but Williams has long said they're legally the boards' responsibility alone.

Last year Rutledge opined the pension funds could merge with the state system, which would stabilize them but put the city on the hook for any benefits that aren't covered by the funds' revenue.

Williams disagreed then and still does, pointing to the state Constitution's prohibition on local governments from extending credit to any other organization. The city would essentially become a guarantor on a loan in that situation, he told the police fund board during its meeting Thursday.

City ordinance allows up to 1 mill to go to the pension funds, but pushing the millage closer to that level without a public vote is legally risky, Williams has said, and Rutledge agreed. A public vote to raise the millage to, say, 0.7 mill could take care of the entire problem, though there's always the risk of losing the vote, Williams said.

Eldon Roberts, a retiree on the board, suggested the city simply cover the gap between the fund's revenue and payments, citing Rutledge's opinion.

"You're buying a lot of time, the way I see it," he said.

Williams pointed out the city's budget is decided annually, and the council could always decide not to support the fund in a given year, returning to the same old problem.

The meeting ended without any firm recommendation for what should be done.

"I think we beat this horse pretty hard," Williams said before the board adjourned.

NW News on 01/20/2017

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