Kansas City faces rising costs
Kansas City’s rich pension packages are becoming an increasingly expensive burden on taxpayers, a reality that elected officials must work to fix soon.
Acting City Manager Troy Schulte can advance the discussions by presenting to the City Council a good way to move future employees into a contribution retirement program similar to a 401(k), now prevalent in the private sector.
The shift for future employees would not affect thousands of current and past employees in the separate police, fire and city staff pension systems.
Those promises must be upheld. However, official city estimates provided in response to a Star query show how quickly costs have escalated for the pension systems, partly because employees are now better paid.
In the 2004-05 budget, the annual public pension contribution was $39 million.
But for the current 2009-10 budget, the taxpayers’ share has jumped to $55 million.
It takes significant public funds to support pensions that offer longtime employees up to 70 percent of their final average pay — and up to 80 percent of pay for firefighters. That’s a much better pension than in much of the private sector.
Historically, the trade-off has been lower-paying jobs for better retirement. But with improvements in salaries, the argument for rich pensions loses some validity.
Schulte said that — while many states and cities have gained attention for their troubled programs — Kansas City’s “are not horribly underfunded” and are in fairly good health with the recent stock market comeback.
Today’s smaller work force will trim the annual public pension contribution to $54 million in the 2010-11 budget.
Any change in retirement benefits won’t be easy, given recent pay freezes and reduced work forces. The firefighters union strongly opposes any change in pensions, and few big cities have blazed the trail in moving to 401(k)-style retirement accounts for new employees.
Two years ago, Mayor Mark Funkhouser called for exploring pension changes, but he failed to follow through. The city ought to offer a fair and reasonable retirement savings program for its workers while reducing the future financial burden on taxpayers.