Fort Smith city officials are considering putting an additional $750,000 per year toward the city's retirement plan for city police officers and firefighters.
The sum, recommended by city finance director Jennifer Walker, is designed to compensate the estimated $10 million-$20 million liability the city will have to pay out over the next 20 years under the current plan due to officers and firefighters under the old retirement plan. Walker said adding the suggested amount to the current retirement plan budget is estimated to compensate the liability over time as fewer retired first responders are on the old plan.
The city is currently under the Arkansas Local Police and Fire Retirement System. It had an estimated $7.58 million in its Retirement System contribution fund in 2017, according to the financial projection included in the study session memorandum.
City Administrator Carl Geffken said nothing is keeping the city from paying the proposed annual sum, which was discussed by the board of directors at a study session on Tuesday.
“In these past several years, we’ve had a surplus (of money), and then we’ve looked at what our priorities are for the upcoming year," Geffken said following the meeting. "That's how we will prioritize our need to put more money into the retirement system with the needs of our Police Department and for their equipment."
Walker explained that the city can either agree to a $750,000 annual sum or could start contributing a greater annual sum in a few years. She said she and others in the city government will be taking into consideration current economic factors as they compensate the liability more each year.
Despite the liability, Walker described the current retirement plan as healthy.
“To date, we have met all of our fund obligations. We have not missed any payments, we haven’t missed any deadlines, we’re reporting.
Walker said all of the approximately 200 retired police officers and firefighters benefiting from the city's current retirement plan are on the old plan. She said the annual liability will not be as much as it is now once the group of retired officers and firefighters starts losing those on the old plan and gaining ones on the new plan.
"At some point, it starts to recover," Walker said. "A lot could change in the next 20 years, but if everything stays the same, that’s probably going to happen.”
Geffken said he and Walker will review the $750,000 increase before formally presenting it for a vote.