CINCINNATI (AP) – Final details of a deal reached recently to fund the city of Cincinnati’s pension system are being worked out between the city and workers, with officials hoping to submit the final agreement for a federal judge’s approval within a few weeks.
The compromise was reached Dec. 30 after nearly 10 months of negotiations between the city, retirees and unions representing current workers. The negotiations were conducted under the oversight of U.S. District Judge Michael Barrett, who would need to approve a consent decree for the final agreement.
Mayor John Cranley said no one got everything they wanted.
“This settlement requires some sacrifice on all sides, but it will help strengthen the city’s financial health and ensures the pension system will still be there for everyone in it,” he said in a statement.
The city’s pension system is funded by investment income and contributions by employees and municipal government. The unfunded pension liability estimated at around $862 million resulted from several factors, including rising health care costs and poor returns on investments due to the stock market crash in 2007-2008, according to the city.
The deal calls for Cincinnati to make a one-time contribution of $238 million to the system, with $200 million coming from a stable health care trust fund and $38 million from an early retirement program funded by all city departments. The one-time payment would be followed by an annual commitment of an estimated 16.25 percent of the annual payroll for 30 years. That would increase from 14 percent, or about $22.3 million, for the current fiscal year.