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City of Gainesville retirement plan gets good marks
City council members heard report about status and were pleased with the results
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When it comes to retirement benefits, Gainesville's government gets a clean bill of health.

Gainesville City Council members heard an actuarial report on the city's retirement plan Thursday morning and were pleased with the results.

"Your plan is in good shape. You're moving along in spite of the worst investment year in 2008," said Rocky Joyner, a senior actuarial consultant for Atlanta-based The Segal Co. "You've maintained where you were and have even gotten healthier over the years."

Joyner handed out an extensive evaluation and a one-page summary on the city's funding requirements for its Retirement Plan A. Of the two available retirement plans, about 75 percent of city employees use Plan A, which is exempt from Social Security.

Under the defined benefit plan, employees pitch in 13.2 percent of payroll, and the city funds a matching 13.2 percent, which goes into a pool for enrolled employees.

"You've always met all of the standards and continue to do so," Joyner said. "Like the rest of the country, Gainesville is dealing with furloughs and freezing salaries, which lowers the total liability of your program but increases the percentage of pay."

The plan has accumulated a $3.4 million credit balance by Georgia funding standards, which may help offset shortfalls in coming years. If total contributions stay at 26.4 percent of the payroll, the city should meet its funding obligation for the next fiscal year.

"This means that throughout the history of the plan you've contributed this much more than the state would have demanded," Joyner said. "It's good to be more
conservative, which gives a cushion for times like 2008. If you can afford it, it's a very positive thing to do."

Joyner also described how huge losses seen in 2008 are spread across several years to maintain balance.

"After the debacle in 2008, for actuarial purposes we don't include all of the loss in the year it occurs, which would make the recommended contributions go all over the map," he said. "The funding is based on the long-term horizon, so about $9 million of loss hasn't been included yet. We use a smoothing method and recognize it over a 10-year period of piecemeal so you don't have the gyrations up and down."

The Segal Co. also will review the city's methods used to value the retirement plans and will present a report this summer.

"This is one less thing to worry about," said council member George Wangemann. "These are hard times, and you worry about a lot of different aspects, and this is one of them. We have a lot of good people on our staff, and they need every penny of their check to use for other things."

Joyner already foresees no "major impediments on the horizon" with the retirement plans, he added.

"Sometimes you read how pension systems are going to pieces, and in some places, that's true. However, you've been taking care of business all along," he said.

"Illinois is a poster child for doing it incorrectly, as well as New Jersey. Others got religion and have taken it to task, such as West Virginia ... but most have been good stewards and have done what they were supposed to do, and that's where you are."

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