We now know how the General Pension contributions jumped from $400K to $6 million. We see how the staff miscalculated the financial impact of the changes to the pension system and the City had its unfunded pension liability go from $2.9 million to $28.9 million in two years to over $50 million by 2008. We see how the City Manager Ed Hinkle immediately cashed on the pension plan that he recommended and even got to play with the numbers so that he could get an additional $160,000 over the next ten years from the system.
The path to reopening the pension is twisted.
In September 2006, the council first voted to reopen the general pension plan. The Council members then were Rhette Anderson, Mike DeSorbo, Owen Eubanks, Rita Jones, Jack Nobles, Jimmie Perkins, J.D. Smith, Mike Wiggins and Paul Young – see vote. The supporting memo just says the funds to cover the reopening are in the FY 1997 budget —page 1, page 2. As I reported earlier the City contribution was only $431,038 according to the FY 1997 CAFR.
In April 1997, the News Journal got wise to them and published a story that the reopening the General Pension and Retirement Fund would cost the City between $942,000 and $2.1 million. Hinkle fired off a memo to the Mayor and City Council. He said the PNJ took the numbers out of context. Hinkle said the cost of the current plan was $941,750.—-which it looks like he is including the current employee contribution to make the cost appear higher. Here is the CAFR report.
Hinkle writes that after the plan is reopened and amended the cost is estimated $2,135,571, “leaving a gross additional cost to the City of $1,194,001.†He claimed that after making several adjustments the actual net cost to the City will be $343,401….See above pdf to see that he was off by $90K. The 1998 CAFR shows the City Contribution jumped to $1,275,304…..which means the PNJ was right. By then, Mr. Hinkle was gone.
Read Hinkle memo – page 1, page 2, page 3, page 4
There is another interesting part of the memo. Hinkle includes the Actuarial Cost Estimate that I discussed in my earlier post. Cavanaugh reports the UAAL – the unfunded actuarial liability – will only be S5.55 million after the pension amendments. It was $28.7 million (see Pension Liab 97 )
The City held an election and a new council approved reopening the pension in August 1998.
The council members then were Jack Nobles, Mike Wiggins, J.D. Smith, Mike DeSorbo, John Panyko, Doug Halford, Marie Young, Owen Eubanks, Paul Young and Rita Jones. Here is the vote and the supporting memo.