|
|
|
|
|
Taxpayers bail out underfunded CADL pension fund January 7, 2024
CADL (Capital Area District Library) has had to increase its contribution to the pension fund for top administrators. Effective January 2024, the contribution went from 8% of employee pay to 18%. The increase was possibly due to the actuary's finding that the funding percentage for administrators was 73.9, compared to 80.2 for union professional staff and 101.3 for union non-professional staff. This is from the page 20 of the actuary report (the NonUnion division below is the administrators):
This means, for example, that if an administrator is paid $100,000 a year, CADL will have to pay $18,000 a year to fund his future pension. The employee also contributes 4.07% of his pay through payroll deduction.
Administrators can retire at age 55 with 6 years of service, reduced from 10 in 2002. It remains 10 for the other two divisions. The pension calculation formula is as follows:
Years of service x FAC x multiplier
For the administrators, the multiplier is 2.5% for service credit earned before 12/31/2019 and 2.0% for credit earned since. That is because - if I understand it correctly - there was a period when administrators had a defined contribution plan rather than a defined benefit plan.
The multiplier for the other divisions is 2.0%.
To illustrate the pension calculation for administrators, lets say you are retiring effective 1/1/2024 with 6 years of service credit. Your FAC is $100,000. For the first 3 years, the pension is 3x100,000x0.025 or $7,500. For the second 3 years, the pension is 3x100,000x0.02 or $6,000. Add the two together and we get an annual pension of $13,500. Of course, to retire with only 6 years of service credit, you'd have to be at least 55 years old.
The union and non-union professionals get an annual 2.5% cost of living adjustments (COLA) on their pensions. It is non-compounding. The union non-professionals get no COLA.
None of the 3 divisions get retiree health care.
The administrator division's pension funding level could have been improved by reducing pension benefits rather than increasing CADL's contribution to the pension fund, which ultimately is paid for by the taxpayers. One way would be to increase vesting (the years of service required to qualify for a pension) from 6 to 10 years, making it the same as for the other divisions.
The following description of retirement benefits is from the new Non-Union Administrative Employees Manual. The manual is dated 12/20/2023, and it is included in the minutes for the CADL board meeting of 12/20/2023, showing the changes.
Send comments, questions, and tips to stevenrharry@gmail.com or call or text me at 517-730-2638. If you'd like to be notified by email when I post a new story, let me know.
|
\
