Once again, we can count on Ed to respond to our questions.
Comment by Ken C:
I spoke to the retiree pension rep, “Robbie” Robertson about my concerns regarding the county's pension contributions, Robbie patiently explained the situation and answered my questions fully. Robbie lives in Chicago, Ill. and attends most of the board meetings by teleconference. I would rather have him physically at the meetings, however he is just too good at representing the retirees currently to give up. Now lets get to the core issue.
I'll be blunt.
The employees and retirees are screwed.
Specifically DeKalb government has rigged the game against the employees. The bad news first. The pension fund is at 1.1 billion, the highest since the recession. The bad news is the pension is only funded to 60 percent. When I retired three years ago, the pension was funded at about 68 percent. Most of the loss can be attributed to the loss of investment and stock value and the continued outlays to the retirees. While the market has recovered, the outlays drew down the funded pension plan down to 60 percent. The BOC is playing games with the employees over employer/employee pension contributions. The game is rigged and its called “Comparing apples to oranges”, then lying about it..
Let me lay down some background information on this so everyone understands the situation perfectly.
Yearly contributions to the pension fund is determined by actuarial accountants, (financial wizards of analysis) The amount needed to fund the pension for the year is then paid for by the employees/employer contributions. This is where we get to the “apples to oranges” game.
Employee contributions are fixed at 8.5 percent. The counties only obligation is to make up for the difference between the employees fixed contributions and the amount the actuarial accountants report needed for the year. In this year the 8.5 percent employee contributions required the county to only pay 12.8 percent of the employees salary to meet their legal obligation to the pension fund, not the 17 percent the BOC claimed is breaking the budget.
Historically the DeKalb pension plan has been funded on 33 percent of the contributions paid by the employees, 66 percent paid by the county. In June the county reduced their contribution and the ratio changed to approximately 42/58% paid respectively by both. Of course the employees received no notice of the change from the Finance department or BOC.
The employees fixed rate of 8.5 percent is the “orange”, the county's floating rate is the “apple”.
Something to recognize is the actuarial accountants are low-balling the total contributions necessary to maintain the pension fund at an adequate level.
Does anyone believe 60 percent funding of the pension systems obligations as adequate? The BOC is lying to the employees on the county's percentage of contributions to the pension fund.
Robbie reports that theoretically the county BOC could elect to pay nothing into the pension system and require the employees to fund it 100 percent. Robbie believes that is unlikely due to the politics. My belief is that if the DeKalb politicians thought they could get away with it they would. A couple of items I was asked to emphasize. Robbie and the pension board is fighting hard to restore the 33/66 percent ratio of contributions to the pension fund, if the county had maintained the agreed fixed 17 percent pension contribution, the pension system could afford a COLA increase for the retirees.
My opinion is the DeKalb BOC will only meeting their legal obligation and attempting to raise the employees ratio of contributions while reducing the county's percentage of pension contributions. I see this trend continuing and evolving as DeKalb politicians chip away at employee benefits to gain more revenue for unimportant services and projects that get them reelected
Considering that five out of seven of the commissioners are Democrats and claim they stand for the “little-guy”, (blue collar workers) I find their stance towards DeKalb employees breathtakingly hypocritical and arrogant. The CEO/BOC and staffers are highly paid and compensated, they then turn around and screw every other county employee in salary and benefits. Gale Waldorf is the only commissioner I respect. Gale is against us also but at least she is up-front and doesn't lie about it.
You gotta love this place!
Stay safe guys and gals!
Comment by Ed Wall:
The State of Georgia Constitution does NOT provide for bankruptcy for Georgia cities and counties.
Your Pension Plan is secured by $1.1 billion in the bank and future contributions from the County and the employees.
The County and the employees have always contributed to the plan the amount that the actuaries recommend. At least I can guarantee that for the last 20 years or so I have been on the Board.
If at any time, the County doesn't contribute the recommended amount, the penalty is the State of Georgia will stop paying any grant funds to which the county may be entitled. You and your Pension Board would additionally file a lawsuit to ask a Superior Court Judge to force the levy of a property tax to make the annual contribution.
Your plan has declined in the percentage funded. The latest actuarial report has your fund at 59% funded.
Your Pension Board would like to see it funded at 75% or better.
The reason it isn't at that level is the following:
investment returns over the last 5 years have been on average about 5% annually. The plan is currently designed to earn at least 7.75% annually. The two big reasons are the interment bubble bust in 2002 and the Great Recession bust in 2008.
The second reason is that the plan has more retirees and more employees.
Your Board has currently engaged the Actuary to look at the assumptions to determine if some of them are incorrect. For example, the actuaries assume the payroll increases 3% annually. Based on info we have, employees haven't been receiving 3% annual increase in pay in a long time. The funding status would increase if we determine that the actual liabilities over the next 30 years are less than have been assumed.
The Board of Commissioners are talking about a new 3rd tier plan for new hires that will reduce the multiplier from 2.25% to 1.50%. The savings would be paid into the plan as an extra contribution to increase the funding.
I know there are a lot of rumors out there and for most of you there are few things more important to you than the assurance that your retirement will be there when you need it.
A lot of you have been attending the Pension Board meetings and that is great. Please reach out to me or any of your Board members and those who have been attending the meetings and ask any questions you may have.
DeKalb Pension Board