A Message from Mayor Randall L. Woodfin
March 22, 2021
Dear employees,
I want to acknowledge this past year has been hard because of the pandemic and the economic impact it has had on the city budget. It came with tough decisions that each of you felt. In order to reduce that burden, I am committed to restoring merit pay raises, COLA and longevity pay in the new budget. Your holiday pay will also be restored in the budget recommendation I present to the council.
When I first became mayor, it was clear to me more had to be done for the pension. The city made a promise to you as an employee and we must keep that promise. It’s the right thing to do.
We have been completely transparent, first sharing information in November 2018 about the risk the pension faced if important steps were not taken to better fund it. Since that time, we have taken decisive action.
This year the city is contributing $28 million to the pension. That’s double what the city contributed in 2017. I have worked closely with your pension board to make sure we can fix this problem, so we don’t have to worry about the pension in the future. That is why the pension board approved changes in a scheduled and advertised meeting in November 2020. The changes approved by the pension board are before state lawmakers right now.
Let me be clear, your benefits will not change under the plan.
There are two changes about contributions to strengthen the plan. First, this plan makes it law that the city must meet its yearly contribution to fully fund your pension. Along with the pension board, I fully support this.
Together, we can provide the security for your retirement future.
The plan makes one other change that will affect your pension plan. To keep it secure for the future, this plan increases your contribution by half a percent. That amount is equal to half a penny. It is the same amount employees made to the contribution at a time when it was fully funded.
What does that mean for you? If you make $50,000 a year, for example, your contribution would increase by about $9.62 per paycheck. That is the only change you will see as a current employee. Your contribution increases by half a percent and the city is mandated by law to cover any additional contributions to fully fund the pension each year. You can review what the contribution change would mean for you at www.birminghamal.gov/pension.
My commitment to recommend to the council that we restore merit pay raises, COLA, longevity pay and your paid holidays will offset the employee contribution changes.
The pension was a problem long in the making. We’ve done a lot in three short years. Together, we can solve the problem once and for all and give you security for your retirement future.
I personally thank each of you for your commitment to our city through a difficult year.
Sincerely,
Randall L. Woodfin
Mayor
Click here for a printable copy of the Mayor’s letter to employees.
Securing Our Pension: Click here to see how changes will secure the pension and allow you to retire with dignity with a fully funded pension.
View HB-510 here
Click here to hear Mayor Randall Woodfin’s Q&A teleconference with employees and retirees on the pension. (March 22, 2021)
Funding the Pension: Click here to see the city’s annual contributions to the pension since 2009.
Employees and retirees are encouraged to email PensionQuestions@birminghamal.gov if you have questions.
Pension Archive
Watch a video message to employees from Mayor Randall L. Woodfin here. (Nov. 14 2018)
Click here to read Mayor Woodfin’s letter to City of Birmingham employees (Nov. 14 2018)
Pension Board Agendas and Meeting Minutes here.
3.12.2019 – Fitch Ratings has downgraded the City of Birmingham’s rating from AA- to A+ due to the city’s unfunded pension liability. The ratings agency cited an “extended and ongoing period of postponed pension contributions.”
The Woodfin Administration has publicly identified the pension fund as an issue that has been developing over the last 18 years. The administration has made this a priority to resolve and is currently working closely with the pension board to identify a long-term solution. Please note, the downgrade has no impact on day-to-day operations or your employment with the city.
Fitch Ratings is one of three agencies that rate the city. The city maintains a High Grade with both Moody’s Corporation (Aa2) and S&P Global (AA).
Fitch identified “the city’s solid revenue framework and healthy fund balances” in support of the A+ rating. In addition, Fitch’s Rating Outlook for the city has been revised to Stable from Negative.
Go to https://www.fitchratings.com/site/pr/10058970 to read Fitch Ratings full report.
8.7.2019 – The City of Birmingham has maintained a AA rating on its general obligation bonds and general obligation warrants with a stable outlook from the credit rating agency KBRA.
The agency stated the stable outlook reflected “KBRA’s understanding that City leaders are working towards sustainably funding annual pension obligations through a combination of incremental funding measures and pension reforms.”
The Woodfin Administration has publicly identified the pension fund as an issue that has been developing over the last 18 years. The administration has made this a priority to resolve and continues to work closely with the pension board to identify a long-term solution.
Click here to read the full report.
If you have additional questions, go to www.birminghamal.gov/pension or email PensionQuestions@birminghamal.gov.
What the ratings agencies say about Birmingham’s pension fund
Click on the links below to read what Fitch, Moody’s and S&P Ratings all say about the impact the current pension fund has on the city’s rating.
Why Birmingham’s pension challenge is not uncommon
More than 100 Michigan municipalities to submit pension crisis plans to state
The Associated Press
A Hole in the Balance Sheet
Sam Prickett, Birmingham Watch
Public Sector Retirement Systems
Pew Charitable Trusts
Many state pension systems have huge funding gaps, liabilities
Geoff Mulvihill, Associated Press
Securing Our Pension.
For questions please email PensionQuestions@birminghamal.gov
