Experts say Cincinnati needs to immediately increase its annual contribution to the retirement system for city employees. The pension fund is about 70.5% funded, down from 77% in 2015.
Not all city employees are part of the pension system; it excludes elected officials and police and fire.
The current estimated unfunded liability is about $724 million. Officials say the retirement system can be fully-funded by 2045 if the city immediately increases its yearly contribution.
"Retirees of my age and older, there's enough money there for our benefits," said Bill Moller, chair of the Retirement Board. "I'm more concerned about the active employees now who are going to retire in 20 years, 25 years, 30 years, that there is a fully funded retirement system for them."
The fund reached a crisis point about 10 years ago, with only about 60% of the system funded. A federally-mandated settlement agreement requires the city to put no less than 16.25% of active salaries into the fund each year; that's estimated to be about $40 million annually.
Actuaries are recommending a slight increase every year until 2040 in order to reach full funding by 2045. The plan would start with 16.75% this year, reaching 20.75% in 2030 and plateauing at 22.25% in 2040.
Council decides the contribution amount during the budget process each summer. The next fiscal year budget must be approved by the end of June.
"We're facing a number of tremendous problems," said Council Member Jeff Cramerding. "The city's budget is just structurally unbalanced; it has been for 10 years [and] we've used various devices to cover that up. But the bottom line is, since we lost the state and local government funds … we've been spending more money than we've taken in and we've never had that very difficult conversation."
Cramerding says it's become typical for council members to allocate funds to community organizations during the budget process.
"But we're not in a financial position to continue to do that," Cramerding said. "Everything needs to be systemic, everything needs to be focused on basic city services."
The first public hearing on the budget processis Monday, April 4 at 6 p.m.
Council recently approved a separate contribution into the pension fund at the end of each fiscal year, as part of the carryover budget. That will add up to $2 million a year into the retirement system.
The city's health fund is about 126% funded. The excess is due in part to a change in policy where anyone hired in 2016 or later will not be part of the health system when they retire.
See the full update below:
