The recent passage of House Bill 4756 in the West Virginia Legislature will provide new options to reduce unfunded liabilities for municipal police and fire pension funds. City Manager Robert Herron, along with police and fire representatives, attended a ceremonial bill signing at the Capitol with Gov. Jim Justice on Thursday.
Unfunded pension obligations are a difficult issue for cities across the country.
“This bill provides West Virginia municipalities the option to sell pension obligation bonds to fund unfunded liabilities as long as each fund is 40 percent funded. This is an actuarially sound and conservative approach to unfunded liabilities while taking advantage of low interest rates,” Herron explained. “This bill enables municipalities the ability to evaluate the financial benefits of low interest rates versus actuarial assumptions, and if appropriate thus reducing annual expenditures to the city’s budget while fully addressing the issue.”
Currently, the City of Wheeling is the only city in West Virginia that qualifies as its Fire Pension fund is 49.5 percent funded while the Police Pension fund is 54 percent funded. Herron noted that 20 years ago, those funds were two and three percent funded respectively.
“Delegate Erikka Storch sponsored this bill and was a driving force in its overwhelming support in the West Virginia House and Senate,” he said. “Municipalities across the state, particularly the City of Wheeling, appreciate the legislative support for this valuable tool. We also appreciate the Governor Justices’ recognition of the value of this next level option in effectively dealing with underfunded pension obligations.”
Storch noted Herron’s work on this initiative.
“Many thanks to Bob Herron for his innovative thinking and for assembling the team that made this such an exciting initiative to support. As the House Pension and Retirement Chairman, this was an easy bill to sponsor and to work for to gain support,” she said.