- May 6, 2024
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The city will have to list its unfunded liabilities, along with its assets, beginning in 2015.
BY MATT MENCARINI | STAFF WRITER
Starting Sept. 30, 2015, the city will have to list its approximately $37 million unfunded liability, tied to fire, police and general employee pension funds, on its statement of net assets, the result of a change initiated by the Government Accounting Standards Board.
“That’s going to have a significant impact on all governmental agencies — all local governments — there’s no doubt.” said Mike Sibley, of James Moore & Co. CPAs and Consultants, during a Feb. 19 presentation to the Ormond Beach City Commission on the annual city audit.
“It’s not just going to be Ormond (Beach), but clearly, this is going to have a pretty significant impact.”
Sibley said the city’s staff was aware of the impending change prior to the presentation, and he has already had conversations with them about the change.
“I believe that two years from now, or so, when we’re required to put this (on the balance sheet), we would be pretty much not solvent,” Mayor Ed Kelley said. “And along with 75% or 80% of cities and local governments throughout the United States, (we’ll be) eligible for bankruptcy.”
Kelley said the city needs help from the state government to allow them to be able to negotiate fairly.
With the unfunded liabilities on the balance sheet, he said the city will be more than $10 million in the red.
For the 2012 fiscal year, the city’s unfunded liability totaled $37,704,000, which was down from fiscal year 2011, when it was $39,656,000.
“There was a slight improvement, but when you’re at this level, that’s really not a big impact there,” Sibley said. “There’s still a long ways to go.”
City Manager Joyce Shanahan noted that the changes to pension funds made at the end of 2012 were not reflected in the numbers.
The city made changes to the police pension while negotiating a new collective bargaining agreement in September 2012, which reduced the city’s liability and capped the number of overtime hours in pension calculation to 300 per year.
For the general employees pension, the city, during collective bargaining in December, agreed to a wage increase in exchange for moving from a defined benefit to a defined contribution plan.
That agreement also reduced the number of bankable personal leave hours from 1,000 to 520 and included an $87,000 one-time expense to buy down those hours from employees currently over the cap.
