To put that number in perspective, with a $400-million budget, this is approximately the cost of all the departments’ (land use, health, social services, selectman) budgets, excluding the schools and the DPW. It’s approximately equal to all the annual capital construction and maintenance budget of our building portfolio and it’s more than the fire and police departments combined.
Last week the RTM passed (129-56-2) a charter change that guarded a portion of the Retirement Fund portfolio of investment. As a colleague from Round Hill exclaimed, “This takes care of 25% of the fund. Let’s vote!” But what about the other 75% of our town’s obligation to our retirees? I ask. My Cos Cob District Eight made a unanimous motion (which failed) to send the item back to committee for more study and guidance.
Why? Because in 2007, the Retirement Fund had earned an excess $2 million (2003-$67mm, 2004-$61mm, 2005-$26mm, 2006-$3mm) needed to keep the fund whole, and no extra taxpayer contribution was required. Then came the economic downturn, and I am told that we lost around 30% of the fund’s market value.
But the market came back and it is said that if the Retirement Fund had maintained its 2007 portfolio mix the last seven years of market growth would have made it whole again. Unfortunately, as of July 30, 2013, the Retirement Fund had a $155mm shortfall and the taxpayer has had to contribute as follows: 2011-$10.7mm, 2012-$14.5mm, 20013-$16.4mm, 2014-$19.8mm, FY2015-$22.7mm.
This totals $84.1mm in five years, almost equal to the amount invested in Hamilton Avenue, Glenville and MISA.
Both the Retirement Board and the BET had said the charter change was neither urgent nor the cause of the fund’s troubles. Charter changes are difficult and rare and the RTM cannot initiate a change, only the BET can. Therefore, last week’s item probably was the only shot this generation of the RTM would have at fixing the retirement dysfunction.
The Retirement Fund and board were created and chartered in the last century, based on 1940s legislation and investment markets. Maybe the whole construct, makeup and methodology of the present Retirement Fund and board is so outdated as to cripple the nimble and astute investments required today.
Why has the Greenwich Retirement Fund been in such a hole, for so long? It’s hard to accept the defense that it’s because of the 2008 crash, since most financial institutions have bounded back long ago. The reasons suggested by several high ranking financial people and past members of the BET are several.
The Retirement Board needs some more professionally astute members. It needs to increase its size to carry a full-time, investment committee. The board meets only monthly, and much of its time is consumed by personnel matters. It’s said that the bureaucratic process often results in delays from time of investment decisions to the actual placement of up to six months. One might think this alone forces the board to “chase” the market, not anticipate it.
Many of these concerns, and others, were raised by research done by several members of District Eight, who have significant credentials in their field. But perhaps the district should have been more flamboyant and screamed “the sky is falling.”
We chose not to in faith that rational arguments and considered respect would accomplish a positive solution eventually. Many outside the RTM on boards and in positions of responsibility assured us that they would not let the issue drop dead after the charter vote. But I think they will.
I am proud of the mature and objective manner in which our Cos Cob district contributed to the welfare of the taxpayer and our town retirees, who earned and deserve a sound retirement.
Christopher von Keyserling is a Republican and a longtime member of the town’s Representative Town Meeting, though the opinions expressed in this column are his own.