We would like to provide some clarification regarding the Austin Monitor article published today, May 14, 2024, that contained information discussed at the City Council’s Audit and Finance Committee meeting held on May 10, 2024. The information shared at the meeting lacked context, was misleading, and only provided the City’s perspective without inclusion of any input from the Pension Funding Working Group Trustees or the pension office.
As we have stated in past board meetings and communiques, there is no crisis. The Fund has NOT yet triggered the Funding Soundness Restoration Plan (FSRP) requirement. If the requirement is triggered in 2025, the Fund will have until 2027 to develop a plan. However, the AFRF Board took a proactive stance and formed a Pension Funding Working Group in September of 2023 to explore options for a shared solution with the City of Austin, rather than waiting to trigger the requirement. The Board proposed to the City to jointly develop a Voluntary-FSRP with AFRF, and the Working Group subsequently initiated conversations with both the City and the AFRF membership. Unlike what was stated at the meeting and reported in the article, the increase in the amortization period was not a finding made by the City's actuarial consultant, Athena; the Board was already aware of the increase prior to their report.
The Board also directed its own actuary, Cheiron, to work on an Actuarial Experience Study a year earlier than required in anticipation of developing a Voluntary-FSRP. Now that the Fund’s 2024 Actuarial Experience Study has been completed, the Working Group will engage in further conversations with the City of Austin to discuss its role in AFRF’s financial reform more formally. At the Audit and Finance Committee meeting, the Committee was informed that the proposed 5-year budget forecast for the City included consideration of a prospective pension reform for AFRF. Although the Fund is not aware of what those budget numbers are, it was encouraging to hear that the City representatives understand that a substantial increase in City contributions to the system will be a necessary part of any reform package.
Please note, there is no legislative proposal that the Board or the Working Group has agreed to. In fact, the Working Group has yet to formalize a proposal for a benefit reform package and currently aims to present one to the membership for consideration in late May or early June. The Working Group will take member feedback into consideration before finalizing the proposal for a Voluntary-FSRP and presenting its final proposal to the city for the 2025 legislative session.
As always, AFRF encourages its members and stakeholders to reach out directly to the pension office for the most up-to-date and accurate information regarding the status of the Voluntary-FSRP.
- Anumeha Kumar, Executive Director