In response to [Atlanta Professional Fire Fighters president] Jim Daw’s “Atlanta Pensions: Myth vs. Reality” [Buckhead Reporter, Feb. 25-March 10, 2011]:
The city of Atlanta maintains three pension funds: police, firemen, and general employees.
These three city pension funds are unfunded to the extent of $1.5 billion. The amortization of this huge sum is costing the City 28 percent of its general fund budget, and, according to Mayor Kasim Reed, “is unsustainable for the city of Atlanta.”
In 2002, the Atlanta City Council increased police benefits by 50 percent with no thought of the consequences. Three years later, City Council increased the pension benefits of the firefighters by a similar amount with no financial impact study or actuarial report required under the city charter. The Atlanta “multiplier” of 3, i.e., for a retiring policeman or firefighter with 25 years of service means 75 percent of annual salary for the rest of his life, was approved by the City Council.
In 2005, facing a financial crisis, DeKalb County reduced its “multiplier” from 2.75 to 2.25, reducing the retirement benefits to 56.25 percent of salary. Atlanta’s “multiplier” is 33 percent higher than DeKalb.
According to John Fortin, fellow of the Society of Actuaries, “the level of Atlanta pension benefits is far in excess of what is offered to most employees in the private sector during the current economic recession.”
“The vast majority of private employers simply cannot afford pension benefits,” according to Fortin. “If a pension benefit is offered, the plan is far less than the plans provided by the city of Atlanta.”
Maintaining the status quo can only result in further increases in the unfunded pension funds from $1.5 billion today to $2 billion within seven years!
This will undoubtedly bankrupt the city of Atlanta, with the retiring city employees no longer having access to their retirement funds.
John Sherman is president of the Fulton County Taxpayers Foundation. He lives in Buckhead.