The Kansas City firefighters union this week ratified a new pension agreement with the city, becoming the last of the four major employee groups to do so.
The agreement means Kansas City municipal government is finally poised to address its underfunded employee pensions after more than 30 months of debate and negotiations. Pension reform will cover nearly all municipal employees, including managers, laborers, police and police civilians.
“This is pretty much a milestone,” City Councilwoman Jan Marcason, chairwoman of the council’s finance committee, said Wednesday.
She said the proposed reforms will put the city on a more predictable financial footing and the retirement systems on a more sustainable path.
City Manager Troy Schulte agreed. He said an ordinance should be introduced early next year, in hopes that it can take effect Feb. 1.
“It puts us on a path to address a $600 million underfunded liability over the next 30 years,” he said.
Local 42 of the International Association of Fire Fighters finished voting Tuesday and ratified the agreement, union president Mike Cambiano confirmed Wednesday. Plan agreements already had been approved for the police, police civilian and city employee pension systems.
Cambiano said negotiations with the city were at times protracted and contentious, in part because firefighters don’t get Social Security and insisted on protecting their only retirement benefit. But in the end, members felt it was a good agreement, he said.
The pension reforms require city employees and police law enforcement — but not police civilians — to contribute a slightly higher percentage of their income to their retirement. Newly hired city workers will have to work a few years longer, with slightly lower benefits upon retirement.
In exchange for the employee concessions, the city has promised to pay the required pension contribution each year, which it has not been doing in recent years, exacerbating the underfunding.
Schulte said that means the next budget year, beginning May 1, will be challenging. The city probably will have to increase its overall pension contributions from about $65 million to about $75 million, and it’s not yet certain how that will be funded.
“We’re going to continue to streamline the organization,” Schulte said. “Fewer authorized positions and get rid of vacant positions.”
While the city must pay substantially more money next year, he said, over time those increases should level off.
Both Schulte and Marcason said Kansas City’s pensions were never in crisis mode, although they ultimately could have been if reforms had not been implemented. They said they were pleased to finally reach agreement with the employees.
“Other cities have implemented pension reform and were then tied up in litigation,” Schulte said. “We have it ratified, so there won’t be any litigation at least. So we’ve got a long-term path without a lot of rancor that other cities have had.”