Mayor Says New Projections Could Allow $2M Reduction In Pension Contribution
By JENNA CARLESSO
November 08, 2012
HARTFORD —— When the city adopted its 2012-13 budget in May, it set aside roughly $20.6 million for contributions to the municipal employees' retirement fund.
The mayor and the city's pension commission subsequently drew up a memorandum of understanding saying the city would pay an additional $11 million into pension fund after city Treasurer Adam Cloud raised concerns about not meeting pension obligations, which require that the city pay $31.6 million.
But Mayor Pedro Segarra now says the additional contribution could be lowered, because new projections show the city may only have to pay $9 million instead of $11 million.
"Our budget team, led by Julio Molleda and Jose Sanchez, has calculated that the amount due to the pension fund is approximately $9 million dollars, $2 million less than the original projection of $11 million," the mayor wrote in a letter to the city council dated Nov. 7, which provides an update on the city's finances and operations.
The mayor said he intended to meet with Cloud and the chairman of the pension commission to discuss the change.
The savings is the result of fewer employees working for the city than originally projected, Segarra's spokeswoman, Maribel La Luz, said Thursday. Segarra laid off 14 city employees in September, mostly from middle management, and eliminated five vacant jobs. The city also has delayed hiring for several other vacant positions.
Cloud disputed Segarra's figures Thursday, saying that projections still show that the city would need to contribute $11 million.
"We shouldn't be projecting numbers relative to the annual required contribution without the guidance and counsel of the actuarial firm that we use and have used to do this calculation year after year," Cloud said.
"There is nothing, in my opinion, that indicates a change in the annual required contribution owed by the city to the municipal employees retirement fund."
Cloud said he plans to meet with the mayor later this month to discuss the matter. He said the mayor should still set aside $11 million for the contribution.
"Our payroll could shrink — the problem is doing a calculation that's not actuarially found," he said. "The charter requires an actuarial estimate."
The city won't know its obligations until a final accounting of the payroll is performed at the end of the fiscal year, he said.
La Luz noted that the $2 million in savings was simply a projection.
"This is not set in stone," she said. "As of today, we have less employees. We won't know for sure until the end of the [fiscal] year."
Reprinted with permission of the Hartford Courant.
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