12-0031 Employees and Elected Officials Retirement Systems—Modification To update the regular interest rate and other assumptions used to evaluate benefits and the level of city funding; modifying certain provisions relating to the method of financing the Elected Officials’ Retirement System.
The Read: Pension system rules are hard. There are separate funds, separate interest rates assumed for collections and payouts, even rules about what kinds of things the fund can invest in. This bill lifts restrictions on investing in Northern Ireland, while the funds’ interest-rate assumptions will be lowered by about one-quarter of 1 percent (from 5.5 percent to 5.25 percent, in the case of “accumulation of member contributions,” and from 8 percent to 7.75 percent for “regular interest”). Regular interest is the rate of return on investments the fund managers assume they’ll get. The higher the assumption, the less money the workers and management have to pitch in every year. So lowering the assumption will bring more realism to the fund and also require bigger cash contributions to keep them solvent.
The main employees retirement fund finished the 2011 fiscal year about 73 percent funded—a lower funding level than it began the year with. The elected officials’ retirement fund was more than 100 percent funded, according to the audit released Feb 1. It also got the best return on investment last year—23 percent. That’s the fund that pays former Mayor Sheila Dixon her $83,000-plus pension.
The Police and Fire fund, meanwhile, was about 85 percent funded at the end of fiscal 2011, according to the audit (this is an average of two different calculation methods). It was not affected by this bill. Federal District Judge Marvin Garbis heard arguments in February that the city improperly cut benefits to some members in 2010. His ruling on the lawsuit is due any time.
12-0032 Special Fund for Quality Schools—Reinvesting in Our Youth The mayor’s office wants to establish a special fund for school construction and renovation.
12-0033 Beverage Container Tax—Repealing “Sunset”—Modifying Amount of Tax This would increase the per-bottle tax on soda to 5 cents from 2.
The Read: The Coke and Pepsi bottlers and the small-store owners are going nuts again. This bill is very much like the one they fought in 2010. The tax was cut down then to 2 cents, but the bottlers and retailers said they figured it would go up. The argument against the tax is straightforward: To avoid the tax, some customers will buy their pop in the county, hurting the local economy. The argument for it is just as simple: The city needs the money for the schools.
The “Special Fund for Quality Schools” proposes to take the bottle-tax revenue and use it to float $300 million in school construction bonds—a fraction of the alleged $2.8 billion needed. At the Council meeting, City Council Vice President Edward Reisinger (D-10th District) talked about his recent visit to Patterson High School. He used the word “unbearable” several times in describing conditions of the building. “I was angry, not just embarrassed, for the city and for the kids” he said. “We always talk about quality teachers and test scores but we send the kids to these schools.”
Council President Bernard C. “Jack” Young (D) took the opportunity to remind anyone listening that he is “in the schools almost constantly. This is nothing new for me.” He said students take a lot of pride in their classrooms but not always, citing a recent renovation that got trashed—graffiti, garbage in the bathrooms. “I spend almost two hours in the schools every day, and I want that to be known for the record,” Young said.
Councilmember James Kraft (D-1st District) agreed that the condition of Patterson High is “absolutely ridiculous.” And he said the students need to help keep the place maintained. “Every day they keep cutting the fence,” Kraft said. “The kids keep cutting the fence that runs along the park, and Rec and Parks has to fix it. What sense does that make?”
Quote of the day
“We’re creating another generation of kids who don’t have anything to do with their time, and we act surprised and upset when what they end up doing with their time requires us to call 9-1-1.”—Councilmember Bill Henry (D-4th District)