By Richard Locker,
June 4, 2013

NASHVILLE — The state has asked Memphis and some other Tennessee municipalities for financial information on the city’s pension plan, as part of a larger review of local government plans operating independently of the state-run retirement system that many smaller cities and counties participate in.

The review is being conducted by the state legislature’s Council on Pensions and Insurance, at the request of Senate Majority Leader Mark Norris, R-Collierville, a member of the council. Norris described the council’s review as another step in a larger effort by state government to ensure that state and local finances are in order.

The state legislature this year approved a major overhaul of the Tennessee Consolidated Retirement System (TCRS) that, for all state hires after July 1, 2014, changes the state pension plan from a defined-benefit plan to a “hybrid” plan that is a mixture of defined-benefits and defined contributions that reduces the state’s risk and financial obligations down the road.

“The state did its pension reforms and we’re looking at the larger cities, the larger component units of state government, for their (pension) plans’ cash flow and future obligations,” Norris said Tuesday.

State law gives the state authority to review local government pension plans to ensure stability. The legislative council asked the director of TCRS, Jill Bachus, to gather information from a dozen or so cities that operate their separate pension plans. Her letter to Memphis Mayor A C Wharton asked him to provide a copy of the city pension program’s latest financial report and actuarial valuation. The state statute formerly required cities to submit similar information annually but it was changed to required them to submit it only when requested.

Bachus said Tuesday it will take her staff time to gather the information from the 12 to 15 cities the council asked for and then review it for presentation to the legislative panel probably when the legislature reconvenes next January.

The letter, coming about two weeks after the state comptroller’s office raised questions about Memphis’s debt levels and plans for a bond refinancing, has apparently raised concerns among some city officials.

But the chairman of the legislative council, Rep. Charles Sargent, R-Franklin, said Tuesday the review is routine.

“We’re reviewing their financial positions. We’re not targeting Memphis. We just want to make sure — regardless of whether it’s Brentwood or anywhere — that when someone retires, the money is there for their pension,” Sargent said. “State law directs the council to look at it. With what’s happened in places like Jefferson County, Alabama, we need to look and make sure we’re not on the verge of calamity and if we are, to take the appropriate actions.”

Quintin Robinson, human resources director for the city of Memphis released this statement regarding the pension:

“Our pension is sound with our investments performing well. We constantly review our asset allocations and adjust as financial prudence dictates. We recognize, however, that our present defined benefit model is quite costly and difficult to sustain and it is for that reason we are involved in an extensive redesign process, which includes presenting options for conversion to a defined contribution model. We are also engaged in a strategic financial planning process which will include plans for addressing our unfunded liability and our Annual Required Contribution(ARC).”

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