On Oct. 12, City Council accepted actuarial reports prepared by Gabriel Roeder Smith & Company (GRS), which estimate the City’s unfunded accrued liabilities to the police and firefighter pension funds at $158.9 million as of March 1, 2009, up from $145.8 million as of March 1, 2008. GRS calculated that the City’s required contribution to the pension funds this year is $14.1 million, up $1.2 million from last year.

Marty Lyons, assistant City manager, said in a memo to Council that the increase in the pension fund liabilities was “primarily due to investment losses during the past year.” At the Council meeting he said the investment losses were 15.2 percent in the police pension fund and 11.1 percent in the firefighter pension fund, which were less than the level of losses in many private sector funds during the same period. Other causes of the increased liability, he said, were higher salary increases than assumed, and more disabilities for firefighters than assumed.

Jim Young, who was a member of the Blue Ribbon Committee that issued a report on the pension fund issues last year, said the unfunded liability “is becoming a bigger problem with each passing day.” He urged City Council to dedicate the time and effort to understand and rectify the problem. “Please do not use a Band-Aid approach, but address the real, structural issues,” he said.

Alderman Lionel Jean-Baptiste, 2nd Ward, said, “It is terrible news, because we now face a legal obligation to pay more money. …We have to be really vigilant as to how we move forward in terms of the budget preparation so we can meet these obligations.”

Alderman Ann Rainey, 8th Ward, said Council needs to keep a focus on economic development “because it is only with revenues that we can get out of this mess. …We have to pay the pension obligation, and it is with revenues that we do that.”

Council is scheduled to discuss policy and strategies to address the pension issues at its Nov. 23 meeting.