Atlanta Mayor Kasim Reed met with the Pension Review Panel on Tuesday to receive an overview of the city’s pension plans for employees and to advance reform in an open, transparent manner, city officials said.
Reed, as one of his first acts in office earlier this year, appointed a 14-member Pension Review Panel comprised of experts and key stakeholders to examine the current challenges facing the city’s pension plans and to identify solutions.
“The hard truth is that right now one out of every five tax dollars from Atlanta’s general fund is going to pay for a pension system which is increasingly unsustainable,” Reed said in a release. “We need to face this challenge head on, being mindful of the responsibility to taxpayers who fund that pension system, without breaking faith with the public servants who have dedicated their lives to the city.”
John Mellott, chairman of the panel, outlined key findings and presented a plan for the second phase of the panel’s work, which will include a detailed analysis of available options. Those options include using pension bonds.
Atlanta’s annual pension contribution has risen 13% each year over the past 10 years and is projected to continue to grow. Under Georgia law, the city is required to pay pension costs, which cannot be deferred.
Pension costs were $144 million in 2009, up from $55 million in 2001, and represented 20% of the city’s budget. The unfunded liability has grown 21% per year since 2001 with the funded rate decreasing to 53% in 2009 from 83% in 2001.
“If no action is taken, the city’s financial position will weaken and the quality of city provided services will slip,” according to a presentation for Tuesday’s meeting.
That presentation said more than half the pension problem is from poor investment performance in the markets, but a significant amount is due to issues under Atlanta’s control, including retroactive pension benefits approved by the City Council in previous years.
The Pension Review Panel expects to take a year to complete its analysis of various options to deal with the growing pension problems.