THE SPYGLASS: Taxpayers on hook for sweet city retirement

As businesses downsize, thousands of workers are shown the door through early retirement with not much to show for their company loyalty.

That's not the case for Colorado Springs city workers, who can retire with taxpayer-funded benefits for years after their departure.

Benefits are so lavish, in fact, that the city has amassed a $58 million "unfunded liability" for police officers and firefighters who continue to get low-cost medical, dental, vision and life insurance after they're no longer wearing a badge or bunker pants.

That can be a long time because cops can retire at age 45 and firefighters at age 50.

"They're allowed to stay on (the benefit roll) at a subsidized rate," said city Finance Director Terri Velasquez. "There is city funding, so they don't pay their full cost."

Sworn employees hired before April 1978 have a different set of benefits under the Old Hire program, which accounts for an additional unfunded liability of $20 million.

State law requires that obligation to be fully funded by 2022, Velasquez said.

"We only have a handful of employees contributing and still working (under that plan), so the city has to make up the difference," she said. "We will have that obligation until every member and their survivor dies."

The city also pays into a pension plan for police and firefighters.

In addition, the city takes care of civilian workers by contributing 11.9 percent of their pay to the Public Employees Retirement Association annually, while workers contribute 8 percent. City employees aren't in the Social Security system.

When workers retire, they sign up for health coverage with PERA at a discounted rate because of those city payments.

"Because the city has contributed for workers during their employment period, they can get a reduced coverage cost," she said, noting the city's contribution covers both health insurance and a pension plan.

Sweet.

But not so sweet for taxpayers.

The sworn personnel program costs taxpayers $2 million a year. To be fully funded would require another $1.6 million a year, Velasquez said.

Nobody knows where the money will come from for that plan or for the Old Hire program.

"Right now, we've not chosen to fund the unfunded liabilities for 2009, and we missed a payment for the Old Hire benefit in 2008 due to our budget situation," Velasquez said.
Taken together, those obligations exceed the Police Department's current-year budget of $73 million.

"Welcome to GASB," said Councilman Randy Purvis, referring to the Governmental Accounting Standards Board. The group issues guidelines for how governments should account for assets and liabilities and recommends that unfunded liabilities be reported annually.

Purvis said when investment markets are humming along, things are fine and the liability is minimal or zero. When they're not, things sour, like now. "It's not a big deal," he said.

That said, Purvis acknowledged that paying benefits beyond retirement is rare or nonexistent in the private sector. He also said such benefits may become a casualty of the city's budget squeeze.

"As we look at budget cutting, that's one of the things we could look at - whether we should phase it out," he said.

After all, just because lots of government agencies do it "doesn't mean it's right," he added.

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Contact the writer: 636-0238 or pam.zubeck@gazette.com