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Riding a bull market, Baltimore's Fire and Police Retirement System made $313 million from investments in 2014 — marking the first time in a decade that its long-term fiscal health improved.

Pension officials cheered the returns as progress, but Mayor Stephanie Rawlings-Blake's administration cautioned against becoming too optimistic about the fund's outlook. The system's annual audit was presented Wednesday to the Board of Estimates.

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"The bottom line is our pension costs are still large. They continue to grow, and they represent a fiscal risk in the long term given general economic uncertainties," said Kevin Harris, the mayor's spokesman.

Still, pension officials said the improvement of the fund's health is heartening to its more than 10,000 active and retired police officers and firefighters. The pension fund invests heavily in domestic companies Intel Corp., Pfizer Inc. and Chevron Corp., along with international firms Reed Elsevier, Novartis and Azko Nobel, and U.S. and Israeli government bonds.

The $313 million brought in from investments in fiscal year 2014 dwarfs 2013's total of $200 million and 2012's gains of $80 million.

Using a new accounting standard, the system's net liability has shrunk from $1 billion in fiscal year 2013 to $880 million in 2014, according to David Randall, deputy director of the fund.

"It's improving," Randall said. "It's heading in the right way. If the market keeps performing the way it has been, in 20 years, we will be 100 percent funded."

In 2004, the police and fire pension system was funded at nearly 97 percent. But its health has weakened every year since. Last year, the system's assets could only cover 69.2 percent of current and future pensions. This year, that number rose to 74.2 percent, according to the system's annual report.

This year also marks the first time a new government accounting standard is being used. The pension system no longer determines unfunded liabilities, but calculates its "net pension liability" — a number based less on projections and assumptions than in the past, according to Randall. The change shows higher long-term liabilities on the books than last year's report, even though the system performed better, officials said.

In addition to the $313 million from investments, the fund got about $28 million in contributions from police and firefighters and about $113 million from city taxpayers. Total income was about $456 million while total expenses were about $225 million.

N. Anthony Calhoun, the fund director, said legislation pushed by Rawlings-Blake and backed by the City Council has helped the fund's health. Those changes have included requiring police and firefighters to contribute more of their salaries to the pension system.

"It's actually a positive report," Calhoun said. "The city is making bigger contributions. The employees are making bigger contributions. The stronger the city gets, the better off the pension funds will be."

Harris said it's not encouraging that taxpayers are chipping in so much to the fund.

"It's rearranging deck chairs on the Titanic," he said. "The fact that the city is making a bigger contribution is not a good thing."

In 2010, Rawlings-Blake introduced a pension overhaul that included cuts to existing police and firefighters' benefits. The unions responded by picketing City Hall and posting billboards accusing elected leaders of turning their backs on public safety workers. Their lawsuit is still pending in federal court.

City police and firefighters pay 10 percent of their salaries into their pensions. Other municipal workers recently began contributing and will eventually pay up to 5 percent of their salaries into their pension plans.

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