Council to consider pension buyouts
City Council will take a closer look at a proposal to save the city's underfunded pension fund with buyouts, an idea recently raised by City Controller Alan Butkovitz.
City Council will take a closer look at a proposal to save the city's underfunded pension fund with buyouts, an idea recently raised by City Controller Alan Butkovitz.
"I think we need to be creative," said Councilman Derek Green, who called for the hearing Thursday. "We have a very challenging pension situation right now. . . . We need to put everything on the table."
The city's pension fund is $5.7 billion short of its $11 billion obligation. Butkovitz has proposed that the city offer cash buyouts to retirees who would then surrender their lifelong pensions.
The payments would cover only a portion of what a retiree could expect to receive over a lifetime. But Butkovitz has said the option might be enticing to some retirees who would receive a cash windfall and then invest it on their own.
City Council would need to approve any buyout.
Green said it was too early to say if Council would support such a measure. He said he had several questions, including whether the city's municipal unions are amenable.
"This is just starting a conversation," he said.
Butkovitz has not proposed what the buyout rate should be, but he is suggesting that the city make the offer to 31,000 city retirees and 2,500 active employees who are covered by the city's oldest and most costly pension plan, referred to as Plan 67. Plan 67 retirees account for $5 billion of the fund's $5.7 billion shortfall.
Butkovitz has suggested the city sell bonds to cover the cost of paying for the buyouts. The city's actuary has said taking the cash from the city's current pension assets would severely drain the fund.
Public-pension buyouts have not been tried but are gaining attention nationwide as cities and states grapple with growing pension deficits. Nashville considered a buyout program last year but decided against it.
Also Thursday, Councilman Mark Squilla said he planned to reintroduce a music-venue licensing bill that stirred controversy earlier this year. Squilla said the new version has been stripped of its former language, which would have required venue operators to compile and make available to police the names and addresses of all performers.
Squilla said the new bill would do what he always intended the first would do: Close a loophole that lets some music venues operate without a special assembly occupancy license.
The bill is expected to be introduced next week, after Squilla consults with figures in the music industry who raised concerns about the previous version.
215-854-2730 @TriciaNadolny