Imagine owning a business with almost 400 employees. Then picture losing around 10% of that workforce each year and having to hire and train replacements to fill in the gaps.
That is the position the City of Athens has found itself in each of the past three years, one which Mayor Ronnie Marks told the City Council must be addressed.
The City gave a 3% cost-of-living adjustment to all of its employees at the start of the latest fiscal year and gave an increase to base pay for both police officers and firefighters in an effort to help retain employees.
Now, the focus has shifted to city retirement plans and whether or not to move some employees to a higher tier. The Council discussed the issue during a longer-than-average work session before Monday's meeting.
At the heart of the issue is the Retirement Systems of Alabama giving municipalities the option to restructure employees on the Tier II retirement scale and return them to Tier I.
According to Human Resources Director Marsha Sloss, the City of Athens has 370 employees, with 235 of them on Tier I retirement plans versus 138 on Tier II.
“As a Tier I employee, you are eligible to retire at the age of 60 with 10 years of service or 25 years of service at any age,” she said. “For Tier II employees, they have to be 62 years old and at least 10 years of service.”
“We have continued to lose our employees,” she said. “We have lost them for various reasons. Since this conversation has come up, we have had some employees tell us that was a contributing factor to why they decided to leave the city. I anticipate we will see more people leave.”
Sloss said the city contributed 11.78% to Tier I employees' retirement plans and 8.81% to Tier II.
According to Jacob Gatlin, the certified public accountant who handles Athens' financial audits, moving all employees to Tier I would cost the city between $200,000 and $300,000 each year. The current annual cost for the city's retirement plan is $3.7 million.
While Marks said the move will cost the city money, he said it might also help retain more employees instead of seeing portions of an experienced workforce leave for either better base pay of better retirement plans at other nearby cities.
Marks used city linemen with Athens Utilities as an example. He said they receive four years of training before being certified as linemen. If they then leave Athens for another job elsewhere, the city is out both the time and money it took to train them.
“It is a critical decision that you guys have to make,” Marks said to the Council. “We are losing employees to other cities that have gone back to Tier I.”
If the city moves all of its employees to Tier I, the issue becomes how that change in cost will be funded.
“It's a tough decision, because there is a lot of money and a lot of people involved,” Councilman Wayne Harper said. “We want to try and do the best we can for all our employees and still keep our city financially sound.”
Councilman Harold Wales said it is the Council's job to make sure the City of Athens is run in such a manner that it remains financially stable.
“I don't ever want to see one of our employees put in his years and then see his pension plan start falling apart,” he said.
Marks said the Council has two more meetings before a decision must be made ahead of a the RSA deadline.
Visit the @CityofAthensAla YouTube channel to watch the entire work session discussing the retirement plan issue.