City of Boulder 2C – Pension Bond Funding

Police officers and fire fighters hired before April 8, 1978 receive a city pension from a different pot of money than more recent hires. Currently 104 employees or beneficiaries receive these old pension plan benefits. Only one active police officer is still paying into the old pension plan fund. These demographics combined with losses in the recent financial markets mean that the pension fund is expected to be short around ½ million dollars a year beginning in 2010. This proposal would permit the city to issue bonds and thereby increase its debt in order to fund its pension obligations. This proposal does not give the city permission to raise taxes.

Recommendation: for

The city is required under state and federal law to meet its pension obligations. Although ideally the city would not have gotten caught in the financial market collapse, it should fulfill its obligations. These payments will inevitably decrease over time as the number of people receiving pension payments declines. The city could just move money around to solve this financial problem, but then it may create a financial problem in another area. Pension obligation bonds are not a good choice in all markets, but with low interest rates and a low stock market this is the right time to issue this kind of bond.


City of Boulder Ballot Issue 2C (Approved Ballot Language)

PENSION BOND FUNDING

SHALL CITY OF BOULDER DEBT BE INCREASED UP TO $11,320,000 WITH A REPAYMENT COST OF UP TO $26,597,000 -- WITH NO INCREASE IN ANY CITY TAX -- TO FUND ONGOING REQUIRED PENSION OBLIGATIONS OF THE CITY FOR POLICE OFFICERS AND FIRE FIGHTERS HIRED BEFORE APRIL 8, 1978; AND

SHALL THE PURPOSE OF THIS MEASURE BE TO ALLOW THE CITY TO ESTABLISH A MORE PREDICTABLE PAYMENT SCHEDULE FOR ONGOING OLD HIRE FIRE AND POLICE PENSION OBLIGATIONS; AND

SHALL THIS BE DONE BY THE ISSUANCE OF BONDS OF THE CITY, AT A NET EFFECTIVE INTEREST RATE NOT TO EXCEED 10% PER YEAR AND WITH A MATURITY DATE NOT TO EXCEED 20 YEARS FROM ISSUANCE; AND

SHALL SUCH BONDS BE ISSUED, DATED, AND SOLD AT SUCH TIME(S) AND IN A MANNER WITH TERMS CONSISTENT HEREWITH, AS THE CITY COUNCIL MAY DETERMINE, SUCH BONDS TO BE PAYABLE FROM THE CITY’S GENERAL FUND; AND

SHALL ANY EARNINGS FROM THE INVESTMENT OF THE PROCEEDS OF SUCH REVENUES AND BONDS CONSTITUTE A VOTER APPROVED REVENUE CHANGE WITHOUT REGARD TO THE REVENUE AND SPENDING LIMITS OF ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION?

FOR THE MEASURE ____ AGAINST THE MEASURE ____


Ordinance 7674 submitting Ballot Issue 2C to the voters
http://www.bouldercolorado.gov/files/Elections/2009/Ordinance_7674-PENSION_BOND_FUNDING.pdf