MORGANTOWN, W.Va. — The pension plans for Morgantown firefighters and police officers are now under consideration to be moved to the state-funded plan despite concerns from pension board members and former city employees.
Morgantown City Council did not vote to move an action item to the agenda at a recent meeting but did receive details on a proposal from Bolton Retirement Senior Consultant Jim Ritchie.
Ritchie presented two options to make up for an over $10 million shortfall for current employees in both pension plans and/or would direct new employees to the state pension fund.
“So we would create a contribution that would say you pay the normal costs, plus enough to fully fund it,” said Ritchie, describing the second of three options that should be considered, outside of the original city contribution plan. “And then the third option is we would move to option two right away, we would freeze the plan, and we would get a discount rate of 6 to 6.5 percent.”
The current plan requires the city to pay 107 percent of the allocation to the Morgantown Police Pension and Relief Fund and the Morgantown Firefighter Pension and Relief Fund, including all taxes required by state law.
Option one would require a 6.5 percent contribution from the city with a goal to fully fund both plans by 2050; the second would require a 6 percent contribution from the city, with a goal to fully fund the plans by 2063.
For city officials, the consideration of the two options to have both the Morgantown Police Pension and Relief Fund and the Morgantown Firefighter Pension and Relief Fund supported by the state stems from the potential financial blowback if the current contribution method remains in place.
“We’re looking at a combined contribution between the two police and fire pension plans; right now we’re making payments of a little over $2.5 million,” said Assistant City Manager Emily Muzzarelli. “That gets to a point where we would have to make payments well over $10 million.”
Ritchie also proposed a table for each option that would implement the use of approximately $5.5 million in municipal sales tax funds towards the currently funded pension plans. Each would decrease the timelines for them being fully funded by about 10 years.
During the public portion of the committee of the whole, representatives of the Morgantown Police Pension Board and Morgantown Firefighters Pension Board, along with union representatives, each expressed concern over the changes to the plan, particularly how the situation got to the point where it needed a change. Larry Hasley, who serves on the Morgantown Police Pension Board, expressed frustration that the funds have fallen short in funding by a total of $10 million. Passed in 2019, city code 733.15 directs twenty-five percent of sales tax revenue to be dedicated to police and fire pension funds. Hasley believes that has resulted in the loss of up to $11 million in investment funds based on the city code, where it states the sales tax has to be used as a supplement to the 107 percent city contribution.
“You guys had a strategy; it was back in May 2019 when that sales and user tax went into place, and not one penny of that sales and user tax has gone to the police or fire fund,” said Hasley.
According to Hasley, the funds were instead directed to a low-interest-bearing checking account and ultimately a money market fund as recently as this past June.
When the contributions were not made according to 733.15, Hasley said the plan members lost interest income due to the difference in retirement market returns. Hasley said the market difference on returns between actual and codified contributions could be as high as six percent. If the money had been contributed as per the ordinance, the city and pension fund members would not have this problem to address, according to Hasley.
“If you would deposit the sales and user tax money today, it would go from 28 percent funded to 38 percent funded,” said Hasley. “And imagine what that percentage would be had the city management placed that money into our funds over four and a half years.”
Retired Morgantown Fire Chief Mark Caravasos and members of the Professional Fire Fighters of West Virginia Local 313 expressed similar concerns over the long-term repercussions if the state plan is used for future hires. Former firefighters and police officers contend the state plan would allow for incoming and departing employees to keep their same level of experience and receive state pension plan benefits, regardless of the amount of time spent in a single municipality. First responders believe adoption of that plan could negatively affect recruiting new officers and degrade the safety and security of the city.
“You don’t have to worry about unfunded liabilities, because you won’t have any employees to step around,” said Caravasos. “Unfortunately, it’s going to affect the safety of the citizens, the safety of the community, and the safety of our brothers and sisters who work in the field of emergency services.”
Morgantown Deputy Mayor Jenny Selin appeared to have supported the switch over to the state plan.
“This is the first time that an administration has had the nerve and the wherewithal to figure out a strategy,” Selin said. “And look at how we solve a problem that preserves something for our police and fire departments.”