There’s an old saying among investors. The stock market giveth. And the stock market taketh.
Guess what the market did to the city of Shreveport’s employee retirement system? In 2017 it was kind. Last year it was brutal. The bottom line is discouraging at best.
The net value of the retirement plan decreased by over $22.3 million from Dec. 31 , 2017 to year end 2018. That is a decline of 11.3% in one year. In that same period, the unfunded liability increased by $25 million. That’s an increase of 5.7% in one year.
Looking at the big picture, the pension plan was only 41.82% funded on Dec. 31, 2018. At the end of 2017, the plan was 47.49% funded. This despite an increase in total contributions by the city and plan members of more than $2.1 million.
In an effort to narrow the funding gap, contributions by the city and city employees have been increased. In 2015 the city contributed 16.5% of the employee pay. The city’s contribution this year is 26% . It contribution will rise to 28% next year and then to 30% in 2021. The employee contribution was 10% in 2015. It is now 12% and will stay at that level through 2021.
Shreveport police and fire have a separate retirement plan.
Aggressive steps taken by the city council in the last term have helped this funding deficit. This is a budget elephant that will not go away and must be a reality for all future city budgets.