Commission must weigh total cost

Published: Friday, January 31, 2003 at 6:01 a.m.
Last Modified: Thursday, January 30, 2003 at 11:16 p.m.

The request for a pay raise of nearly $100,000 by Michael Kurtz, general manager of Gainesville Regional Utilities, and for participation in the pension plan for city employees with credit for his 28 years of past service, reported in The Gainesville Sun (Jan. 22), illustrates one of the problems of the city's pension plans.

Kurtz's pension, based on 28 years of service and his requested salary of $250,000, would be $140,000 a year. If he were to retire in average health at age 60, the total pension payments over a reasonable life expectancy would be more than $3 million.

Kurtz is an able manager, though I make no judgment as to the reasonableness of his request. Requests of this type should come to the City Commission with an estimate of the total cost. Within the past few weeks, I have suggested that any pay increases under consideration for employees who will soon be eligible to retire come to the commission with estimates of the costs of the resulting increase in pensions.

Pension payments are based on earnings in the three years before retirement. For example, an increase in pay of a $100 a month for an employee retiring in three years with 25 years of credited service would result in an increase in pension payments of $50 a month. This could have a present value of about $5,000, depending on the employee's age at retirement and the rate of interest on which calculations are based. Five thousand dollars is quite a large bonus.

This does not mean that employees should not be granted an increase in pay in their last three years of employment, but that city officials should know the total cost of the recommended increases in pay. This seems so important that the requirement that cost estimates be made available should be included in the city charter.

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