Officials of the Baltimore fire and police pension fund painted a grim financial picture yesterday, laying the groundwork for requesting tens of millions of dollars from city coffers.
The value of the fund has dropped by $554 million in the past 2 1/2 years, officials said. More than half of the decline came from scheduled benefit payouts, and the rest resulted from the plummeting stock market.
"Revenue has dropped dramatically," said Thomas P. Taneyhill, the executive director of the fund, speaking at the city Board of Estimates meeting. "This year, diversification [of investments] didn't work. Quality didn't work. It didn't matter where you went. We have not heard anyone say that we are going to get out of this recession any time soon."
If the fund does not have enough money to meet obligations to retired police officers and firefighters, the city must provide a lump-sum payment to it.
In some years, the pension fund has not needed city money. But in July, the city will need to pay $81 million to the pension system.
Because of an accounting technicality, steep market losses from the past six months will not hit the city until July 2010. At that point, the city's contribution could balloon to $110 million, according to Capt. Stephan Fugate, the head of the fund's board of trustees and president of the fire officers union.
"Frankly, it could be more," Fugate said.
The large payment will put more pressure on the city's already tight budget.
Two other city pension funds are in better shape. The City Employees Retirement System, which pays benefits to 8,600 people, projects that it will need $48 million from the city in fiscal 2010, said Roselyn H. Spencer, the executive director of that fund.
Elected officials participate in a third retirement system that is overfunded this year, in part because retired elected officials have not received an annual cost-of-living increase, Spencer said. In the 2010 budget year, the fund is expected to need $339,000 from the city.
City Council President Stephanie C. Rawlings-Blake raised questions about administrative costs for the fire and police fund, which have more than doubled since 1999 to $3.2 million last year. The city employees fund has also seen a spike in administrative costs since 1999, paying out $2.9 million last year.