Tuesday, February 10, 2015

The Mayoral Forum at Christ Chruch Cathedral: Several candidate express concern about Metro's pension liability; advocate change.

On Sunday night I attended the Mayoral Forum at Christ Church Cathedral. Afterwards, someone asked me who I thought stood out and honestly I had to answer, "no one."  All of the candidates gave good answers to questions.  There were some that seemed a little more polished than others, some projected more personality than others, but no one stood head and shoulders above the rest.

Christ Church Cathedral filmed the event and posted the below video. About the first 7 minutes of the video is blank and then there is a prayer and introductory remarks and the sound is not working properly. Each candidate gets an opening statement and unfortunately the sound is not working for several of the candidates opening remarks, so if you join the video at time stamp  11:39 you are not missing anything.

The candidates were asked to address issues of poverty and homelessness and affordable housing and how the city can work with the faith community. That is the primary focus of this forum but some other issues are also addressed.

After the forum there was a reception in the fellowship hall. I got to speak to four of the candidates individually.  One of the major concerns I have is what metro will do about its unfunded pension liability.  If we don't do something to get it under control it may freeze out funding for everything else.  If Nashville was to see a decline in our fortunes rather than continued growth, we could be forced to raise taxes even if we did not want to.  I wanted to know how the candidate felt about this issue and if they agreed it was an important issue facing our city. I also wanted to know if they would be inclined to support a transition from a defined benefit plan to a defined contribution plan.

Currently, we have a defined benefit plan as do most cities but not very many companies. At one time most pension plans were defined benefit. A defined benefit plan says something to the effect that after x number of years being an employee, the employer will pay you x% of the salary you were making at retirement for the rest of your life.

A defined contribution plan says something like, the employer will contribute an amount equal to x%  of your salary every year you are employed into a retirement fund. Often, above the first amount which the employee does not have to match, the employer may match another x% of the employee's salary if the employee wishes to contribute more to his retirement. Often the investment options are limited to a few options with varying degrees of risk and return.

Some employees will do better under a defined contribution plan than a defined benefit plan, but others will not do as well. For the city, it removes future liability.  Transitioning to a defined contribution plan would not address our current $396 million unfunded pension liability but it would stop it from growing.

I asked my question of candidates David Fox,  Jeremy Kane, Kenneth Eaton, and Charles Robert Bone.  I was pleased with the answer from each candidate. Each said they would support a transition to a defined contribution plan. Each seemed knowledgeable of the issue. Now I can't recall which one it was, but one of the candidates volunteered we had to make changes in Metro's retiree health plan also. He said that liability also ran into the millions.

Even before I got my question out David Fox said, "I'm already there," and he expounded on the topic with enthusiasm. Jeremy Kane was also especially convincing. He relayed his experience as head of the Lead Academy charter school organization and said that Lead had already transitioned the non-certified personal (meaning people other than the teachers) to a defined contribution plan.  He said at first there was resistance, but now the teachers are asking how they can get in the plan. Charles Bone who has served as legal counsel for Nashville's Convention Center said the convention center has already transitioned to a defined contribution plan and it was something the city had to do.

I don't believe any of them were just telling me what I wanted to hear and none of them gave weasel answers. I believe they were each telling me the truth. I am pleased. Unfortunately, I did not get to speak to the other candidates, so if a candidate would like to email an answer to the same question, I will be glad to post that candidates comment.  If I failed to reflect any candidates position adequately, please feel free to set the record straight or if any candidate would like to expound on this issue, I will be glad to post your comments.

There are other issues I feel strongly about, such as education, and sidewalks, and metro's pro-gay and political correctness policies, overextending our bond commitments, mass transit and traffic, and managing growth, but I think there is no issue more important than our unfunded pension liability. We must address it and stop it from growing.

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