City Council recently approved the 2024-2025 Operating Budget. For retirees, this is one of those “good news – bad news” events.
First – the good news. For the first time since the Collaborative Settlement Agreement (CSA) was approved in 2015, Council approved an increase in the amount the City contributes to our pension fund. The percentage of payroll increased from 16.25% to 17%. This represents about $900,000 to help our pension fund. More importantly, the increase reflects Council’s understanding that the employee pension fund will not meet its goal of being fully funded by the end of 2045 under current conditions. For years, Council has rejected any increase to the minimum 16.25% contribution rate, ignoring annual pleas to follow the terms of the CSA and contribute the amount recommended by an independent actuary.
Now – the bad news. A report released earlier this year indicated that the City’s contribution rate should increase from 16.25% to 29.5% of the fulltime payroll to attain full funding of the pension trust by the end of 2045. Knowing that such a large increase would be difficult to get approved, the Retirement Board proposed a plan to gradually increase the contribution rate by 1.5% annually. Council rejected both options and voted to increase the contribution rate by only 0.75%. Under current assumptions, unfortunately, this increase will not meet the pension funding goal of the CSA.
So, what now? Here are some takeaways from the Budget approval process:
- Council took a small, but positive step in addressing the employee pension fund by increasing the City’s contribution rate. This demonstrates Councilmembers and City administration recognize (on some level, anyway) that the status quo cannot continue forever. A tiny step, but not insignificant.
- Employers everywhere, including in Cincinnati, are taking steps to encourage or require workers to return to workplaces (vs. working at home). If more employees return to work within the City limits, it will generate more earnings tax for the City.
- For CMERA members who can vote in the upcoming election for City Council, cast your votes for candidates that you believe will support the CSA. Even if you don’t live in the city, you may have friends or family members who do. With elections nearing, beware of candidates who propose or support lofty projects without adequate funding.
- We do not know when Judge Barrett will rule on the items before him regarding our pension and health care. We will continue to urge resolution of the outstanding issues.
- The City is hiring a new Retirement Director who we hope will continue to work with the Retirement Board and CMERA to fulfill the vision of the CSA. CMERA will reach out to them with an invitation to discuss issues important to retirees.
On behalf of the officers and directors of CMERA, I thank you for your continued membership and interest in your retirement association.
I especially want to say THANK YOU to the CMERA members who took the time to go to Council Committee meetings and to call or write to Councilmembers and City administrators about pension funding issues. I have no doubt that you made a difference in the outcome of this year’s budget process.
Please tell all your City retiree friends, family and acquaintances about CMERA!
Kathy Rahtz, President CMERA