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City Council delays action on pension fund

By Lyle Moran, lmoran@lowellsun.com

Updated:
11/20/2013 05:23:55 AM EST

LOWELL -- The City Council delayed action Tuesday night on creating a new pension-reserve fund and transferring $3.1 million into the reserve, to gather more information about the why the fund is needed and how much money should be placed into it.

The council also approved transfers of $100,000 to boost police overtime, $500,000 to cover a deficit in the court-judgments account, and $250,000 to pay for paving projects.

Councilors voted unanimously to send City Manager Bernie Lynch's request to create the pension-reserve fund to the finance subcommittee for discussion.

Lynch said transferring much of the city's $4 million budget surplus, or "free cash," into the fund would help the city prepare to address in a disciplined manner anticipated increases in the city's pension-budget appropriations the next two fiscal years.

Lynch and Chief Financial Officer Tom Moses said the city's annual budget appropriations toward pensions could rise by more than $2.9 million in the budget year beginning July 1. In the budget year that began July 1, the city budgeted $16.5 million for pensions.

City Councilor Rita Mercier requested further discussion by the finance subcommittee because of concerns that once the $3.1 million is put aside for pensions, it could not be used to support other issues, such as public safety.

Lynch acknowledged that money from the fund could only be appropriated to pay for retiree pensions, though he said funding an increased pension assessment with money from the reserve could free up other funds to pay for different priorities.

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City Councilor John Leahy said he would like to find out if the $3.1 million in free cash Lynch wants to put toward pensions could be better used to fund different projects in the city.

"There are certain things downtown and in the neighborhoods that need our attention," Leahy said.

City Councilor Ed Kennedy said there was no urgency for the council to take action on the pension-reserve request, and said he also would like to see different options for how the $3.1 million could be used.

One of the primary reasons for the increase in city pension assessments is a new actuarial study in which the Retirement System is fully recognizing steep investment losses from 2008, said Moses.

The three approved transfers all come from free cash. The $100,000 transfer for police overtime will boost that budget to $900,000 and allow the city to deploy officers at targeted times and locations to address the recent spike in crime, said Lynch.

The court-judgment transfer was necessary to cover a $520,000 payment earlier this year to a former city police officer whom a jury found was retaliated against for filing a discrimination complaint against the city.

Councilor Rodney Elliott criticized Lynch for only budgeting $200,000 for the court-judgment account when the city knew it would be paying former police Officer Robert Alvarez more than $500,000 this year due to the loss of its appeal in 2011, a loss the council only recently learned about.

"It appears the full final payment was not budgeted to keep the loss of the Alvarez appeal from the council," said Elliott. "This seems to be the latest example of the council being kept in the dark about important matters."

Lynch said the fact the council was not told about the loss of the appeal when it occurred and that the funds were not put in this year's budget to pay Alvarez were oversights.

"The budgeting authority should have been put in this year's budget and it was not, and I take full responsibility," said Lynch.

Kennedy requested a full chronology of the different events involved in the Alvarez case.

The $250,000 for paving will go toward road and sidewalk projects that will be completed in the spring, said Lynch.

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