When budget hearings began, the amount needed by City of Memphis to fully fund the pension plan was $80 million a year. City of Memphis had been paying $20 million of the $100 million needed for the ARC (Annual Required Contribution) since the Great Recession, leaving a balance due that was growing each year.
The ARC increased dramatically by $50 million from 2008 to 2009, and with the continued $20 million payments a year until the present fiscal year, the amount of the ARC grew to the current level of $100 million a year. As a result, the pension funded ratio fell from 103% to under 75%.
All public pension plans come with an ARC. The figure varies from plan-to-plan and year-to-year, but it represents a mathematical calculation of how much an employer (in this case, City of Memphis) must pay into the plan to balance the long-term investment returns and payments to beneficiaries.
$80.0 million – Current Gap in ARC Payment
$84.4 million – Increases to Police and Fire Budgets (2005-2015)
67% – Police and Fire Expenditures as Percentage of City Operating Budget (2014)
78% – Percentage of City’s Total Authorized Fulltime Employees in Police and Fire Divisions (2013)
22% – Percentage of Authorized Fulltime Employees in Parks, Roads, Engineering, Libraries,
Community Centers, Information Services, General Services, Human Resources,
Finance, Public Works, City Court, etc. (2013)
403 – Number of new sworn officers hired between 2005-2012 – 26% increase.
Officers per capita:
6.14 – Memphis.
6.03 – Chattanooga
5.43 – Knoxville
4.94 – Nashville
Sources: City of Memphis Budgets, Multi-Year Strategic Fiscal Report, CAFR, PwC
Any idea what the annual return has been on the pension fund for the past decade?
Here’s the report on returns prepared by City Council’s actuarial firm: http://www.memphispension.org/3rd%20Quarter%20Pension%20Performance%20Report%20%28Oct%202013%29.pdf
I would like to see comparative data for the Sheriff’s Department. With increasing MPD costs and annexations by 7 Shelby municipalities, Sheriff’s budget should be shrinking.