An attempt by the Metro Council to amend the city-parish’s retirement ordinance to assess an appropriate share of retirement costs on the proposed city of St. George should it successfully incorporate was postponed Wednesday for another 30 days.
This delay means the Metro Council won't consider a vote on the request from the city-parish’s retirement board, which wants to ensure the retirement system is able to continue paying benefits to existing and future retirees, until after early voting on the proposition to incorporate a new city in southeast East Baton Rouge Parish.
The retirement board’s attempts to tweak the city-parish’s retirement ordinance is in response to the St. George incorporation effort, which will conclude on the Oct. 12 voting day.
Early voting is Sept. 28 through Oct. 5, excluding Sept. 29, a Sunday.
The financial impact St. George would have on the city-parish's retirement system and the parish's general fund as whole was at the center of debates this summer over a failed legislative bill to establish the framework of how St. George would transition into its own city should voters within its proposed boundaries approve the incorporation measure.
Gov. John Bel Edwards vetoed the bill, saying the last-minute changes made to the bill would have unfairly allowed the new city to split from the city-parish’s retirement system without paying its share of the system's accrued liability.
"Unfunded accrued liability" is basically what the city-parish owes employees who have retired but doesn't have the funds to pay right now.
According to previous reports, the city-parish's unfunded accrued retirement amount is nearly $600 million.
The proposed amendments were set for a vote last month but were deferred so the city-parish's retirement board could address concerns St. George proponents had about the recommended changes.
Denise Akers, general counsel for the retirement board, said those concerns included making sure St. George wouldn't begin making the annual payments it's obligated to until the city starts generating revenue through a 2% sales tax built into its proposed $50 million budget.
One of the proposed changes would give St. George two years to start making payments after the possible incorporation, she said.
St. George organizers also wanted changes applied to the formula the retirement board will use to calculate unfunded accrued liability the proposed city would need to pay and asked for procedures that would give them a way to challenge the retirement board's revenue calculations.
Drew Murrell, an attorney and spokesman for the St. George movement, also said the proposed city should only be obligated to continue paying the retirement benefits for city-parish employees who had worked in the St. George area and/or whose work contributed to St. George's day-to-day operation in the past and future.
Akers, in an interview before Wednesday night's meeting, said that is impossible.
"We went to the city-parish's (Human Resources) department about that and learned they don't keep records regarding who was working where 20 to 35 years ago," she said.
As for the other concerns, Akers said the retirement board met a number of times with St. George proponents to address the issues they've brought up. And the board has made several tweaks to the proposed amendments to try to settle any grievances, she added.
"We've been trying to be fair," she said. "We just wanted to have a formula in place for any municipality that tried to form in the parish to understand the debt they would be obligated to pay."
The formula the retirement board settled on basically defines a percentage of the unfunded accrued liability that a new municipality (in this case St. George) must take on based on the revenues the new municipality would be collecting in its general fund that are no longer going to city-parish's general fund.
By the board's calculations, St. George would have to pay the city-parish somewhere between $5.3 million and $7.5 million annually in unfunded accrued liability to the retirement system. That money could be paid in installments over a 15-year period, Akers said.
"If the Metro Council decided to adopt something longer than 15 years, the payments could be lower," she said.
The committee that drafted St. George's first-year budget set aside approximately $4 million annually for "legacy/retirement costs" to the city-parish.
"We anticipate having a $10-15 million surplus," Murrell said. "If you're talking about an extra $1-2 million dollars, that's something we can take care of through our surplus funds."
Murrell added organizers intended to factor in that $4 million allocation for retirement payments over a 30-year time span, although that is not indicated in the current spending plan.
The surplus St. George proponents have touted is something that has consistently been challenged by the opposition and two LSU professors who have said organizers are overestimating revenues and underestimating expenses.
Metro Councilwoman Barbara Freiberg asked Akers how the retirement board handled the situation when the city of Central incorporated 15 years ago.
Akers, who wasn't representing the retirement at the time, said that through a verbal agreement Central forfeited its rights to certain assets, like buildings, with the understanding the city-parish would also assume Central's retirement debt.
The board that oversees the city-parish’s retirement system wants the parish’s retirement ordinance amended so the proposed city of St. George…
One in an occasional series of stories on the possible creation of a new City of St. George in the southeastern part of East Baton Rouge Parish.