Birmingham city workers could have their pension on the way to being fully funded by the city and raised employee contributions by half a percent, according to proposed changes in a new bill currently in the Alabama legislature—changes that Mayor Randall Woodfin says is important to securing the future for the pension plan.
“When I first became mayor, it was clear to me more had to be done for the pension,” said Mayor Randall Woodfin in a statement on March 22. “The city made a promise to you as an employee and we must keep that promise. It’s the right thing to do.”
House Bill 510, sponsored by Rep. Allen Treadaway, R-Morris, former assistant chief of the Birmingham police appointed by Woodfin in 2018, would raise employee contributions from 7% to 7.5% and require the city to fully fund the city’s pension annually.
This means that if a current employee were to make $50,000, according to an example Woodfin used in a statement, their contribution would increase to $9.62—all other contributions are mandated by the city to cover.
“That is the only change you will see as a current employee,” Woodfin said in regards to the 0.5% increase. “Your contribution increases by half a percent and the city is mandated by law to cover any additional contributions to fully fund the pension each year.”
The crux of the new changes would put pension “on solid ground,” Woodfin said, according to Birmingham Watch.
Woodfin said that the organization has been open from the beginning about intentions regarding the pension plan, and that the pension was a matter that needed to be handled.
‘”We have been completely transparent, first sharing information in November 2018 about the risk the pension faced if important steps were not taken to better fund it,” said Woodfin in a statement. “Since that time, we have taken decisive action.”.
Under former Mayor Bernard Kincaid, the city’s pension had been underfunded since 2002, according to Birmingham Watch. As Woodfin took office In 2017, the city’s contribution totaled $750 million, however the city’s annual contribution to the pension has doubled since then.
“This year the city is contributing $28 million to the pension,” said Woodfin in a release. “That’s double what the city contributed in 2017. I have worked closely with your pension board to make sure we can fix this problem, so we don’t have to worry about the pension in the future.”.
However, HB510 has received criticism from Dexter Cunningham, former Birmingham pension board trustee who said that workers should not be asked to pay more since the pension fund is not in “dire shape” because of changes made to the city’s pensions four years ago, according to WBRC.
“This is going to impact citizens in a negative way, and employees in a negative way,” said Cunningham. “The only wind out of this is for this administration to improve their bond rating.”.
Rep. John Rogers, D-Birmingham and Jefferson County Commissioner Lashunda Scales opposed for the percent increase saying the cut for workers’ paychecks is too much.
“He wants to take out more money out of employees’ pay to fully fund this pension plan,” said Rogers in a YouTube livestream about the percent increase proposed by Woodfin. “It seems small, but in a pension plan that’s millions and billions of dollars.”.
Scales, who is running against Woodfin for Mayor this upcoming election, said that we cannot continue to cut the pay of workers’ who are vital to the daily operations within the community.
“You are concerned about your neighborhoods being cleaned, who is going to come and clean them–it is going to be the publics works department,” said Scales in a YouTube livestream. “You want to get any kind of building permit, get renovations to your home, or homes that needs to be demolished. There is a department that runs that. Those folks can’t function if we are always taking away money from them, and then we expect them to pay into a pension system that is not giving them a return on their investment.”.
HB510 will be proposed at a hearing in front of the Alabama Senate Wednesday at 1 p.m.