Nearly a year ago, a pension reform task force spelled out recommendations for fixing Kansas City's municipal pension funds, which are severely underfunded and have a $600 million liability.
The city is spending close to $60 million in taxpayer dollars annually on four different pension plans - employee, fire, police and police civilian - but actuaries say the city should be spending more than $80 million annually. And that's a pricetag the city says it simply can't afford.
Since last December, the city's management and labor unions have met 16 times to try to reach an accord on how to move forward, but so far, no dice.
Five weeks ago, City Councilwoman Jan Marcason, chair of the Kansas City Council's finance and governance committee, told city staff she was tired of waiting for a pension reform proposal and she wanted something substantial within two weeks.
Well, that deadline came and went, and still the city's management and labor groups haven't reached an agreement on pension reform.
So today, Marcason said she'll introduce an ordinance tomorrow that carries the weight of law. It will spell out firm deadlines for a pension reform plan, and she wants something by Dec. 13. That would allow time for any such plan to be incorporated into next year's budget.
City Manager Troy Schulte said the two sides are getting closer, but there is still one major sticking point. Among the general areas of consensus:
- There will be a new pension tier for new labor hires at City Hall, with less rich benefits.
- Current employees will put in more money to their pensions -- about 1 percent more than they currently pay.
- The city will pay the annually recommended amount, but hopes to keep that at or below $60 million annually.
- The city will provide a reduced health care subsidy to what it's provided in the past, helping to contain costs.
- The city will work in coming years to eliminate its $600 million liability, which is a significant cloud over its credit position.
- New management employees will be offered a defined contribution 401(k) type benefit, instead of a pension benefit.
The main sticking point is that the city wants to reduce or eliminate guaranteed annual cost-of-living increases for retirees. Half the $600 million liability is pegged to those growing costs. There are differing legal opinions as to how locked in those guarantees are. This is the area where the labor unions are reluctant to give in - they want the city to pay more to address that guarantee - but there may be some growing flexibility.
We'll see how close they've gotten to consensus by mid-December. Marcason said that if the unions don't come up with a concrete proposal by then, the city may still move forward. She said the city can't solve this difficult predicament in one year, but it has to get started.
"We've reached the cut-off point," she said, noting that the city can't stall any longer in confronting this threat to its fiscal stability.