First, let’s update our pension percentage-funded chart with the FY2013 numbers. These are from Comprehensive Annual Financial Reports (CAFRs).
[easychart type=”line” width=”420″ title=”Yearly Funding of Pensions by Percentage Funded” groupnames=”IMRF, Police, Fire” valuenames=”’99, ’00, ’01, ’02, ’03, ’04, ’05, ’06, ’07, ’08, ’09, ’10, ’11, ’12, ’13” group1values=”101.47, 109.49, 111.34, 107.18, 98.78, 82.83, 72.48, 73.17, 77.08, 80.46, 60.69, 62.50, 54.54, 57.73, 59.66″ group2values=”88.52, 86.68, 73.96, 66.09, 65.26, 66.86, 67.12, 67.24, 71.63, 64.38, 55.91, 59.59, 64.99, 55.06, 53.06″ group3values=”62.13, 57.64, 57.03, 52.85, 51.19, 53.21, 51.64, 49.44, 50.20, 46.16, 40.39, 42.59, 45.77, 41.65, 41.95″ minaxis=”40″]
City of DeKalb is quick to tout its balanced budgets and its growing “reserves.” But if DeKalb is doing so well, why isn’t it making up the pension-funding ground it lost during the past two recessions?
I think the main reason is annual pension expenses have been rising so fast — faster than inflation, often in double digits — that we can barely stay abreast of current necessity.
[easychart type=”line” width=”425″ title=”Fiduciary Expenses by Fiscal Year in Millions” groupnames=”Annual Fiduciary Expenses” valuenames=”’04,’05,’06,’07,’08,’09,’10,’11,’12,’13” group1values=”2.32, 2.34, 2.65, 2.96, 3.4, 3.67, 3.92, 4.2, 4.57, 5″ minaxis=”2″]
City of DeKalb levies property taxes to help meet FICA and pension expenses, but council has not raised the levy for the past several budget cycles, which means the levy tends to cover less each year and the city must use increasingly larger chunks of operating revenues to make up the differences.
[easychart type=”line” width=”425″ Title=”Property Tax Coverage of FICA and Pensions” groupnames=”Property Tax Collected for FICA and Pensions, FICA and Pension Spending” valuenames=”’06,’07,’08,’09,’10,’11,’12,’13,’14” group1values=”2.67, 3.03, 3.41, 3.68, 3.77, 4.16, 4.11, 3.98, 4.24″ group2values=”2.97, 3.31, 3.64, 3.61, 4.09, 4.62, 4.47, 4.2, 4.87″ minaxis=”2.5″]
(FY2013 numbers are estimates and 2014’s are projections, but the rest are actual as reported in annual budgets.)
None of this would be a problem if revenues were growing sufficiently to cover the pensions. But as I’ve explained many times before, they are not (and not expected to anytime soon).
And because they are not, FICA and pension expenses are not only outrunning the property tax take, they are eating up more of the total operating budget over time.
[table id=81 /]
The amount spent on FICA and pensions is approaching 16% of the annual operating budget just to fund them at the same levels as now. At what percentage does this become a problem and we start taking action?
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*Budget figures for fiduciary spending do not match CAFR figures because the budget figures only count the General Fund. Money is also budgeted to FICA and IMRF out of the Airport Fund and Water Fund.