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Reichert asks to cut cost of living raise for city retirees

With stock market losses taking a bite out of Macon’s pension funds, Mayor Robert Reichert is asking the City Council to hold off on a cost of living increase that retired employees would otherwise receive in January.

Those 1.5 percent benefit increases generally go through automatically, but the mayor and council can cancel them in a given year if they decide the increases would have an adverse effect on the pension funds.

Both the city’s general employee and the police/fire pension funds, which are kept separately, have lost substantial value during the economic downturn. Some of that has been made up during the current rebound, but Reichert said that after consulting with the committees that oversee the funds, he thinks payouts should stay flat next year.

After all, he noted, Social Security recipients aren’t getting a cost of living increase in 2010, and the U.S. economy hasn’t seen any inflation this year. In fact, the cost of goods generally has dropped.

“I think (retirees) can understand the same way everyone else understands what happened this year,” Reichert said.

But it looks to be tough sledding for the proposals, one of which deals with the general employees fund and one of which deals with the fire and police fund. Neither measure got enough votes from council members to make it to a discussion agenda last week. That could change in a couple of weeks when the council’s Ordinances and Resolutions Committee, which sets agendas, meets again.

But holding back on a raise for retirees is a political difficulty. And though Reichert said the oversight committees for both pension funds “basically recommended” that the city hold off on raises, there is plenty of sentiment running the other way.

“As far as the police and fire pensions fund, we feel certain we can (give the raises),” said Councilman Charles Jones, a former firefighter who is chairman of the police and fire pension committee.

“But we just have to do an actuarial study (first),” Jones said. “We’re for (giving it). We’re definitely for it, and we all agree with doing it.”

Charlie Bishop, a retired police officer and former Bibb County Commission chairman who was recently named to the committee, said holding back on the increase “might lead to litigation.” He also said there was no reason to cut it “other than to satisfy some whim from some politician.”

As for the general employee pension fund, committee chairman Reggie Moore, who works in the Macon-Bibb County Parks and Recreation Department, said his committee will support withholding the increase. That decision was based on an actuarial report that indicated “it was not in the plan’s best interest this year,” Moore said.

When it comes to pension funds, the city has to balance the needs of current retirees with those of future retirees who are counting on the funds still being there when they retire. Cash paid into the fund is invested, so the fund’s total value goes up and down. There are rules about how much money has to be in a given fund, based on the number of current and future retirees in the system.

At their most recent peaks, the general employee and police and fire pension funds topped out at about $70 million and $170 million, respectively, Macon Finance Director Tom Barber said. Last month, they were sitting at about $57 million and $154 million, Barber said.

Currently, the city contributes 2.35 percent of general employees’ salaries and 6 percent of police and fire employees’ salaries to the funds, Barber said. A recent actuary report suggested that both contributions may need to increase to 16 percent, not only to pay for the cost of living increase but to boost the fund in the wake of stock market losses, Barber said.

“(The cost of living increase) would just make it worse,” Barber said.

Councilwoman Lauren Benedict, vice chairwoman of the general employees committee, said she’s not sure whether the city should give the cost of living increases.

“I think we need to have a discussion” about it, she said.

To contact writer Travis Fain, call 744-4213.

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