Ann Arbor officials: Proposal 3 on Tuesday's ballot improves pension board composition
Governance of the city's retirement system is defined by the city charter and changing its composition requires voter approval of a city charter amendment.
The current nine-member board includes the city administrator, chief financial officer, three trustees appointed by the Ann Arbor City Council, two trustees elected by general city members, one trustee elected by fire members and one trustee elected by police members.
In an effort to increase accountability and reduce the potential for conflicts of interest, a council-appointed blue ribbon committee recommended several years ago that the city administrator be removed and other changes be made to the makeup of the board.
At the heart of the concern is the independence of the board members. Of the nine current members, a majority are direct beneficiaries of the retirement system.
If Proposal 3 is approved on Tuesday, the board's makeup would be changed to include five appointed citizen trustees, one elected trustee each for general city members, fire members and police members, and the continued membership of the chief financial officer.
The agenda packet for Thursday's City Council meeting includes a copy of the new actuarial valuation report for the city's retirement system. The report shows the city had 798 retirees and 135 beneficiaries receiving benefits as of June 30.
The average age of persons receiving benefits is 67.2 and the average annual benefit payments equal $31,258.
The number of retired members and beneficiaries increased by 6.1 percent in the past year, while the average age of the retired members remained the same. The total annual benefit payments for those members increased by 7.3 percent in the past year.
As of June 30, there also were 664 city employees in active service covered under the provisions of the city's retirement plan.
The report shows the city's pension system 88 percent funded, compared to being 90.3 percent funded the year before and 126.8 percent funded in 2002.
The city's unfunded pension liability has grown to $57.6 million, up from $45.5 million a year ago — and significantly up from $1.7 million in 2008. City officials are hoping recent changes to retiree benefits will help the city chip away at that obligation.