Time and Location: Wednesday, March 31st @ 10:30 am, City Council chambers (4th floor of City Hall). There is no public testimony built into the schedule.
What it is: The Board of Pension & Retirement oversees the city's pension fund. This includes administering benefits to eligible retirees and investing the assets of the pension system. The board has nine-members, including the Director of Finance, City Solicitor, Managing Director, and City Personnel Director (all appointed by the mayor), the City Controller (an independent elected office), and four at-large members elected by the city workforce. The board is in the process of hiring a new executive director for the fund. The position has been open since January.
How much $$$ is involved: According to Mayor Nutter's five-year-plan, the city will pay $350 million into the pension fund by the end of the fiscal year. That number is expected to increase to $480 million in FY11 and almost double to $602 million by FY15. Next year, pension costs are expected to eat up 13 percent of the total $3.9 billion budget.
Why it matters: The health of the pension fund is one of the biggest fiscal challenges facing the city. According to a report from the Philadelphia Research Institute, the pension fund only has enough money to cover 45 percent of its obligations to current and future retirees. Like cities across the country, Philadelphia is struggling to pay the cost of pension benefits for long-retired workers.
What's Nutter's plan? Nutter wants to continue a series of pension deferments that started last year to generate extra cash for the general fund. The city is seeing an immediate short-term savings and plans to use part of the revenue raised by the sales tax to pay back the deferral. Nutter will also continue to press for long-term reduction in pension benefits for city workers in contract negotiations, along the lines of changes to the police contract for new recruits awarded in December.
What to expect at the hearing: There will be a lot of discussion about the health of the pension fund and the types of investments being made by the board. We may also hear questions about minority participation in contracts to manage the pension fund assets, as well as other contracts awarded by the fund.
What happened last year: Mayor Nutter got authorization from City Council to ask the state legislature to allow the city to defer a portion of its pension payment until 2011 (Did you get that? It was complicated. Basically the mayor got an extension on part of the city's pension payment). The city will have to pay back all the money to the pension fund with 8.25 percent interest by 2014.