Atlanta Mayor-Elect Moves to Fix Pension

December 23, 2009 (PLANSPONSOR.com) - Atlanta Mayor-elect Kasim Reed announced Tuesday he's forming a panel to tackle the city's pension system costs.

The Atlanta Journal-Constitution reports that the city is expected to spend more than $100 million — about one-fifth of its general fund budget — on pensions in the fiscal year that ends June 30. By comparison, in 2002, Atlanta spent just $36 million on pensions. Reed described the costly pension system as “the toughest challenge the city faces right now,” according to the news report. 

The nine- to 11-member panel will be led by John C. Mellott, the former publisher of the Atlanta Journal-Constitution. Mellott, who retired from the newspaper early this year, is a certified public accountant who held several senior financial roles within Cox Enterprises, the company that owns the newspaper.

Reed said he hopes to announce the members of the entire panel shortly after Christmas, and that he is working through whether members of the city’s unions and employee organizations will serve on the panel.

The newspaper said Reed pinned much of the blame for the rising pension costs on the City Council, which approved changes to the pension system in 2001 and 2005 to help Atlanta catch up after years of underfunding its pension plans. During his campaign he said he would consider changing the time employees could become vested from 10 years to 15, and look into whether the city could enter Social Security to reduce pension costs.

In June, the City Council approved changes proposed by outgoing Mayor Shirley Franklin that reduced how much the city spent on pensions this budget year by about $15 million. Franklin was one of several big city mayors who last year called on the U.S. Treasury to use some federal bailout money to help local governments with pension costs (see Mayors to U.S. Treasury: We Need Pension Help from Bailout).

Also during the financial crisis, Atlanta officials asked state legislators’ permission to diversify pension fund holdings (see Atlanta Seeks Pension Diversification OK).

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