Mayor: COLA for retirees too costly
Jeremy Lazarus | 11/1/2018, 6 a.m.
That is Mayor Levar M. Stoney’s explanation for his decision to back away from his March promise that he would seek to use a surplus to pay for a cost-of-living adjustment, or COLA, for retired city employees.
The mayor said in a March 6 tweet that his first priority would be to use a surplus from fiscal year 2018 that ended June 30 to fund the first COLA for retirees since 2009.
But to the dismay of the Richmond Association of Retired Employees, which represents the nearly 4,300 city retirees, the COLA was off the table when the city announced a surplus of $12.5 million.
Instead, Mayor Stoney and his staff, with City Council support, earmarked most of the money to pay off deficits involving the City Attorney’s Office, to beef up funding for the city retirement system and to go toward the city’s untouchable savings funds.
In its deliberations at a special meeting Monday, City Council didn’t mention a COLA for retirees. Instead, council members largely adopted the administration’s recommendations and also voted to use the remaining $263,000 of the projected surplus to repay the public art fund that provides sculptures and other art for city property.
Council members called it a downpayment on restoring the $2.1 million that was stripped from the fund last spring to help balance the budget.
Mayor Stoney’s spokesman, Jim Nolan, said Mayor Stoney “continues to look for opportunities to provide support for city employees and retirees.”
“The mayor will review the quarterly financial reports,” Mr. Nolan stated. “And when the projected revenue exceeds the projected expenditures to the magnitude that will be sufficient to provide a COLA to the retirees, the mayor will initiate an ordinance to provide a COLA.”
But Mr. Nolan noted that based on past calculations, a 1 percent COLA would cost $6 million to $8 million, an amount too large for the current surplus and the city’s needs.
Bottom line: “The city would need enough money to fund it,” Mr. Nolan stated.
Retired Fire Battalion Chief Larry Glidewell, a spokesman for the groups representing city retirees, called the mayor’s decision “disappointing.”
Mr. Glidewell said that it might be time for city officials and the City Council to rethink having an independent pension plan if cost-of-living adjustments are too expensive. The city began operating the Richmond Retirement System 63 years ago in 1945.
He noted that only a handful of localities and school systems continue to operate their own retirement systems, with most having turned the responsibility over to the far larger Virginia Retirement System.
He said records show the state system has provided a small COLA to pensioners it serves virtually every year, a far better record than the city’s pension fund.
At this point, the city retirement system has set a policy of avoiding an annual COLA from its own funds until the system is 80 percent funded. Projections indicate it could be 10 years or more before that happens.