Last week, Mayor Joe Ganim announced a pension bond sale that officials say will save the city approximately $2 million per year in debt service payments covering retirement costs for uniformed services. City financial scrutineer John Marshall Lee is skeptical about the numbers. He shared his thoughts Tuesday night with the City Council. From Lee:
Last month when I spoke to you I asked you to stop, look, listen, and understand the “larger picture”of the City of Bridgeport. I point to fiscal pictures because the City chooses activities that require funds, things like education for youth, safety for citizens from predation by people who have negative intent on people and property and fire safety, especially in times of severe cold. But what priorities are used?
It would seem easy to keep these things in mind but there are many things to be counted and for which to be accountable. And when the data is not presented in a fashion that is easy for you to compare your task is more difficult. You need help that has experience, that can be trusted, and that knows how to ask questions and receive full answers.
Last month I called to your attention Pension Plan A that serves retired police and firefighters including their widows with a retirement benefit.
It was a Ganim1 plan from 2000 that borrowed $350 Million and is paying it back at more than $30 Million annually until 2029. Over $900 Million from taxpayers was to be the cost of Ganim’s plan, or so the actuaries assumed. But investment markets fall as well as rise, and assuming 8% is earned when you are earning less is kind of living a lie, hoping things will turn in your favor.
By the time Ganim2 returned to office less than $70 Million of the original $350 Million was there to pay benefits. Taxpayers were paying an additional amount for the actuarial liability present in the form of ADDITIONAL PLAN CONTRIBUTIONS that today amount to $15-17 Million annually and are scheduled to increase by 5% per year. The Pension Obligation Bond has about $360 Million to be paid before 2029. But the public is paying an additional and unexpected $250 Million or more with these necessary incremental contributions to fund Plan A. How does the Ganim1 plan from 2000 look at this point?
I am not trying to say that he is responsible for all of the risks. But I am pointing out that leaders who share only the positive parts of a story cannot be fully trusted. And if I cannot trust your statements about money, what can I trust.
On December 28, just last week, Ganim2 who is running for Governor, used a recent bond sale where all politicians declared a victory, because MERS plan has accepted a $90 Million down payment on former Plan B public safety employees. Taxpayers, it was not mentioned in the article but this is the payment for police and fire OVERTIME benefit expense. In 2015 when the City signed a contract with the Police, we had no money set aside to pay retirement benefits on overtime earnings. Actuaries had to get to work and figure how to fund it. And legislators came bragging back to the City that they saved the difference between a contribution to MERS calculated at 8% and a bond cost of 4.25% and have told us that this has a lower expense of $2 Million annually to the City. But did they ever tell us that this recognition of “overtime” for certain personnel was to cost $6 Million or more per year beyond the time when most current safety employees will be receiving checks?
And since the MERS plan has earned only 4.74% on average for the past ten years, while MERS is assuming 7% or more, is it likely that this plan too, like our own Pension Plan A will find the MERS actuaries returning to our City and increasing our contribution? But this is the way plans work. Actuaries look at reality. Politicians look to the best way to explain. And in this City telling the public what Labor Relations worked out has been too explosive. So, this major giveaway, specifically to provide benefits for external overtime, where life and limb are at lesser risks than on 24/7 patrol, limits the City ability to educate youth, or do other important tasks. If you had been told the entire story, shown the entire cost structure what decision would you have made? And Ganim2 has taken Ganim1 lessons in pension benefit funding and refused to acknowledge the future risks that are causing us $15 Million problems annually today by selling us $2 Million dollar savings? How do you feel about that? How does the big picture look? Time will tell.