SPRINGFIELD — Calling the city’s pension liability a “fiscal time bomb,” City Council Finance Committee Chairman Timothy Allenhas scheduled two additional meetings this week to discuss current strategies and future options to resolve the issue.
The Finance Committee is scheduled to meet Monday at 1 p.m. and Tuesday at 2 p.m. at City Hall with several city officials including members of the finance team on the pension liability issue. The latest sessions are believed to be the fourth and fifth on the issue in recent weeks.
The Springfield pension system is 26 percent funded, making it the worst-funded public pension system in the state, officials said.
“It’s a fiscal time bomb, it’s an absolute fiscal time bomb for Springfield,” Allen said Friday. “It’s time for us to take action.”
In addition, Allen said he wants to speak with representatives of the city’s bond rating agencies, Moody’s and Standard & Poor’s, for information on the city’s strong bond ratings despite the pension issue. He said his inquiry is informational and not undermining the city.
A state retirement commission has approved a more aggressive plan for Springfield to fund its pension system, now just 26 percent funded, but stated it has “serious concerns” about the long-term sustainability of the plan.
But another member of the Council Finance Committee, Timothy Rooke, said the pension issue is not new following numerous advisories from the city’s financial team in recent years, with Allen being among those informed coupled with his direct conversations with finance officials.
“I’m starting to think he’s the absent-minded professor,” said Rooke, who supports current strategies that have been approved by local and state retirement boards.
Allen, who is a faculty member at Springfield College, said the issue is very serious and he intends to stay on it.
Mayor Domenic J. Sarno is among city officials who have defended the city’s current multi-year strategy to deal with the pension liability issue. That strategy has been approved by the city and state retirement boards and will allow the city to fully fund the pension system by 2034 by increasing payments yearly.
In addition, Sarno announced Thursday he is creating a new pension reserve fund and will initially place $721,487 in that account to further aid the effort.
Allen had called for a greater amount.
The city has allocated $30.2 million for pension costs for fiscal year 2017, which begins July 1. The amount will rise by 14 percent in fiscal 2018 and another 14 percent in fiscal 2019, to help the prolonged catch-up effort, officials said.
The city’s total unfunded pension liability totaled approximately $731 million in 2014.
Mayor Domenic J. Sarno is creating a reserve pension fund, initially with $721,487, as part of an “aggressive” schedule to fully fund city employees’ retirement accounts.
Rooke said he is not attending the upcoming two Finance Committee meetings on the pension issue, citing information he has already received numerous times, including a lengthy meeting in September, and his own conversations with city finance officials.
While Allen and finance officials have stated recently that city retiree pensions are safe, Rooke criticized Allen’s reference to a “time bomb.”
“That is reckless to say we have a ticking time bomb for the retirees,” Rooke said. “You have to understand that many of the retires are elderly and on fixed incomes.”
Allen said the meetings this week will also address the funds left in the free cash surplus from fiscal 2015, with 15 percent of the surplus earmarked by the mayor for the pension reserve. The council will consider approving that transfer on June 20, and does not have power to add to the amount without the mayor submitting an increase.
Allen said the pension fund will increase by $4.2 million next year alone, so the city needs to set aside any funds possible to offset that impact and future impacts.
Council President Michael Fenton has also advocated for more aggressive action to address the pension liability.
Springfield’s salary database for 2015 revealed that 330 city and school employees earned more than $100,000 annually including 179 police officers topping that income.