Blue Springs city retirement system
Blue Springs officials are considering changing the employee pension plan to have a greater salary percentage payout but less possible employee contribution match from the city.
Currently, Blue Springs is on the L-7 plan for LAGERS, the state’s Local Government Employee Retirement System, which uses 1.5 percent salary multiplier to determine an employee’s monthly pension. Employees also have an option to contribute up to 3 percent of their pay toward deferred compensation, which the city matches. Moving to L-6 would put the multiplier at 2.0, but in Blue Springs’ case would also include a required 2 percent employee contribution that the city would match toward deferred compensation.
According to city estimates, for an employee who makes $4,500 a month and works for 25 years, that equates to a monthly pension increase from $1,687.50 to $2,250.
A resolution to consider that particular plan will be on Monday’s City Council agenda. LAGERS requires a 45-day notice before the council could vote on an ordinance to change the plan, and city staff would use time between resolution and ordinance to survey city staff on the issue.
City Council members who have pushed for consideration of the change say it can help retain quality employees. A switch could allow some senior employees to retire earlier, allowing more opportunities for in-house advancement.
Independence, Liberty and Lee’s Summit employees all are on L-6, though Independence and Liberty have 4 percent employee contributions and none have a city match.
“The No. 1 reason for people leaving is there’s no opportunity for advancement,” Council Member Kent Edmondson said. “If we do this, it’s a domino effect…Part of this would be we have an opportunity for people to move up.”
Edmondson said employee compensation has been left behind as the city worked to accomplish other parts of its strategic plan from several years ago.
“One of the things we had was to value personnel and knowing we’d have a turnover, that we have plans in the way to bring people up and work within,” he said. “I think we’ve kind of forgot about that plan. We’ve achieved a lot of those goals we had in that strategic plan, but I think we’ve left this behind.”
Under the proposed change, the city’s LAGERS contribution would be an additional $671,671 annually, according to Assistant City Administrator Christine Cates’ presentation to the council last month. That includes the cost of covering prior work.
The city could make a one-time buydown payment of $5 million, $7 million or $11 million that would lower the annual cost or, in the case of $11 million, save the city $222,000 annually with its LAGERS contribution. Such a buydown would come from the general fund and water and sewer funds.
Not part of the resolution, and another point of discussion for some council members, are raises for city employees. A consultant’s study showed Blue Springs generally lags behind peer cities by a few percentage points with salaries. The city will receive some federal funds through the American Rescue Plan, and while they can’t be used toward pensions, Cates also cautioned about using finite Rescue Plan funds toward employee raises, which would be an ongoing expenditure.
“I think it’s important to go out and look at what we’re paying our employees,” Council Member Susan Culpepper said. “If we raise our pay, we raise their retirement.”
Culpepper said the focus should be more on better pay.
“I don’t like to think there’s someone working for the city of Blue Springs who has to work a second job to get food on table,” she said.
Council Member Jerry Kaylor said retirements not only give other employees a chance to move up, but initially take off the most expensive part of the city’s workforce. He said he remembers when Blue Springs used to be the desired place for municipal employees, but since then the city has become more like 1990s Kansas City Royals, in that the best players ultimately go elsewhere.
“If we don’t take care of our employees and keep our employees, you’re not going to have a good city,” Kaylor said.
Council Member Chris Lievsay said there’s no reason the city can’t improve both retirement and wages, as the city’s fund balance can support a slight hit.
“Clearly based on the numbers, we can afford it,” Lievsay said of moving to L-6. “We not only can afford it but without any effect to the budget, and there’s no reason we can’t also raise wages. It’s a matter of political will.”