A review of the city of Fort Worth’s reserve funds has turned up more than $14 million that can be re-allocated to other uses, city officials said Tuesday.
For the current fiscal year, the savings will go to covering a gap in the city’s worker’s compensation fund. But for next fiscal year, the money could be free for other uses, Aaron Bovos, the city’s chief financial officer, said.
“We’re going to try to fix it in ’15 so we don’t have to address it in ’16,” Bovos said in an interview.
The city is freeing up the biggest piece of the money, $13.795 million allocated annually into a trust for retiree health benefits. The city has closed the retiree health benefits fund, and newly hired employees are not eligible for those benefits.
City Council members, in an afternoon pre-council discussion Tuesday, informally agreed to a staff recommendation to stop making the so-called “OPEB” payments starting with the 2015-2016 budget. The $13.795 million payment has come from all city funds, including $10.4 million in the big $590 million general fund. The citywide budget for this year is $1.5 billion.
The city will make this year’s retiree benefits payment from excess reserves in the city’s group health fund, staff and council members informally agreed Tuesday.
City Council members will vote in May on new policies, changing its 2012 vote to continue funding the retiree health trust, and transferring money into workers compensation.
Besides the retiree healthcare money, in the review of reserve funds, the city staff also turned up $3 million in excess funds in risk management and $680,000 in the unemployment fund.
The change in funding the retiree healthcare trust caps a running debate on the council about whether to save money now to fund retiree healthcare for city workers years into the future.
Councilman Jungus Jordan, who has questioned the funding of the trust as unnecessary “double-payments” for healthcare while the city struggles to meet massive intrastructure needs, commended the staff recommendations Thursday.
“We don’t need a trust to pay healthcare costs in 2029,” he said.
Council members asked City Manager David Cooke about whether the changes could impact the way credit rating agencies view the city. Credit ratings affect how much the city has to pay to borrow money.
“What we share with them is our confidence in managing” the city’s finances and the funding of healthcare, Cooke said. “I think they will do fine.”
Mayor Betsy Price also commended the move to a “pay as you go” system of funding retiree healthcare benefits.
The city’s retiree healthcare trust has $57 million, including interest earnings, Bovos said.