Officials say pension fund for Anniston police and firefighters in better shape

Feb. 02--If the city of Anniston keeps making required minimum payments into its fire and police retirement fund, as it has in recent years, the money will be there for retiring first responders, those who oversee the plan said Thursday.

Chad Little, the fund's actuary, at a work session before a regular quarterly meeting Thursday told the fund's trustees that the retirement plan is on track, despite wording in a recent audit that seems to say otherwise.

The wording was the result of changes to governmental accounting standards of auditing practices, and does not reflect Anniston's current fund status, Little said.

"If the city continues to make its full contribution every year, " Little said, Anniston's retirement plan will be fine.

The Governmental Accounting Standards Board, the private company that sets the federal government's accounting guidelines, in 2012 adopted rules that require auditors to look back into a municipality's history to help predict a fund's future.

Anniston's history of payments to its fire and police fund has at times been troublesome, due in part to a previous state law that capped the city's contribution at 10 percent of the fund's obligation.

Additionally, previous administrations' contributions were, for several years, less than the the required amount. That was reflected in the wording of he city's latest audit of the police and fire fund.

"We have found that the fiduciary net position is projected to not be sufficient to make projected benefit payments," the audit reads.

Because of the contribution shortfalls and the recession in 2008, which hurt the city's returns on investments, Anniston's police and fire fund in 2013 was underfunded by about $7.2 million, Little said.

"And now that the city is contributing that full contribution plus making that payment to pay on the funding deficiency, it's down to $6.7 million," Little said, speaking of the fund's balance as of Oct. 1, 2015. The numbers for 2016 will be announced at the trustees' next meeting, Little said, but the deficit should show a further reduction.

The city in 2012 began taking steps to right the fund. In 2012 Anniston's contribution to the plan was about $800,000. In 2014 the city paid just more than $3 million into the plan, and in 2015 paid $3.3 million. Last year the city paid about $3.5 million into the fund.

Some of the money in those payments are what's required to maintain the plan, while the rest goes toward money not paid into the plan in previous years.

Corey Salley, the city's finance director, said at Thursday's meeting that the city expects to pay about $3.6 million toward the plan this year.

Little said the accounting change came after cities across the country had been underfunding their pension funds, thereby worrying bond rating agencies that cities were being inaccurately rated.

Using the auditor's adjusted expectations, which take into account Anniston's past troubles paying contributions, the city's fund is headed for a long-term expected debt of $88 million, Little said.

But Little said if the city makes the minimum payments, as it has in recent years, that debt drops to $40 million.

"That's a huge difference between those two liability numbers," Little said.

It may also help the city's fund that investments are doing well, according to the person in charge of them.

Greg McNeille with Dahab Associates, which manages the city's fire and police pension fund investments, told trustees Thursday that for the past five years Anniston's fund investments outperformed about 97 percent of similar public funds, earning just more than 8 percent interest during that time.

Salley told trustees that he will continue to recommend that the city fully fund the retirement plan.

"It took us awhile to get into the position we're in. It's probably going to take us awhile to get out of it," Salley said.

Staff writer Eddie Burkhalter: 256-235-3562. On Twitter @Burkhalter_Star.

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