WHEELING - In what has become a statewide struggle to keep public employee retirement plans solvent, Wheeling is faring better than many of its counterparts around the Mountain State - but city taxpayers will have to continue to ante up to keep things trending in the right direction.
With the city almost a full month into a new fiscal year, Finance Director Michael Klug said Wheeling's police retirement plan is 35 percent funded, with the firefighters pension fund at 26 percent of full funding.
The statewide funding level for public safety employees is 17 percent.
Photo by Ian Hicks
Wheeling’s police and fire pension funds are 35 percent and 26 percent funded, respectively, according to Finance Director Michael Klug.
To be considered 100 percent funded, a plan must have enough assets now to meet all anticipated obligations for current and future retirees.
A recent study by a Chicago-based actuarial firm estimated the total unfunded liability of West Virginia's 53 municipal police and fire pension plans at $976 million.
Based on the current funding percentages cited by Klug, Wheeling's share of that liability is about $52.6 million.
The picture is much more bleak in Charleston, where the total unfunded liability exceeds $250 million and the police and fire pension funds stand at just 8 percent and 5 percent of full funding, respectively.
That's about where Wheeling was 12 years ago. According to Klug, in 2000 the firefighters' plan was 10 percent funded and the police pension fund just 7 percent.
"So far we've been able to meet our obligations. ... We have a long way to go, but at least (the trend is) positive," said Klug.
During the current fiscal year, which began July 1, Wheeling expects to contribute about $1.7 million to the police pension fund and $1.65 million to the firefighters' fund. The combined total of $3.35 million represents about 11 percent of the city's $29.89 million in budgeted expenses for the year.
Combined with employee and state contributions and interest on investments, the police and fire funds combined should take in about $2 million more than they pay out this fiscal year, during which benefit payments are expected to total almost $5.6 million.
But if Wheeling is to adhere to its current plan to keep the funds solvent, the annual taxpayer contribution will reach $4.7 million within five years, and will more than double from this year's level to about $7.06 million by the 2024 fiscal year, the last of the city's current 15-year plan.
Klug said Wheeling thus far has been able to keep expenses under control, and has been fortunate to see revenues exceeding expectations. But, he acknowledged, there's no guarantee that will continue.
"It definitely is a big challenge. ... Revenues, yeah, they do increase, but it becomes tough at budget time to come up with that 7 percent additional," Klug said, referring to the state's requirement that municipalities increase their contribution to the funds by 7 percent each year. "There's going to have to be some tough decisions made."
Although Klug couldn't say exactly when those "tough decisions" would be necessary, that time doesn't appear to be upon the city just yet, as Wheeling ended the previous fiscal year on June 30 with a cash balance of about $1.01 million.
City Council is considering spending about one-fourth of that sum on 2-percent pay raises for all city employees, with the remainder devoted to street paving, police and fire equipment and other projects. Klug said there's been no discussion of using the surplus funds to supplement the pension funds.
"The cash carryover typically is used for capital improvements," Klug said. "That's the way we've been approaching it."