In FD, pension woes avoided
Fort Dodge isn’t faced with a financial crisis fueled by pensions, but increasing retirement costs have been passed on to residents in the form of higher property taxes, according to city officials.
Unlike many other American cities, Fort Dodge doesn’t have its own pension plan for its employees. Instead, it is part of two statewide plans: the Municipal Fire and Police Retirement System of Iowa and the Iowa Public Employees Retirement System.
That second retirement system, commonly called IPERS, includes all city workers who aren’t police officers or firefighters.
”I would argue that we are in a better position because of these two state plans,” said City Manager David Fierke.
In the fiscal year that will begin July 1, Fort Dodge will pay a projected $1,262,000 into the police and fire retirement system, according to Jeff Nemmers, the city clerk and finance director.
Also in that year, the city will pay an estimated $640,000 into IPERS, Nemmers said.
He said the city’s pension obligations are mandated by state law.
Both retirement systems use actuarial estimates to calculate the amounts that cities and workers must pay.
In the current fiscal year, the city’s contribution rate for IPERS is 8.67 percent of each worker’s base wage or salary.
That figure will rise to 8.93 percent in the fiscal year that will begin July 1.
The amount a police officer or firefighter pays into the retirement system is fixed by state law at 9.7 percent of their base wage or salary, Jim Vollmer the city’s human resources director, said.
The city’s share of a police or fire pension is much higher than that. Fort Dodge now pays 26.12 percent of the base wage or salary.
Starting in July, that amount will be 30.12 percent, Nemmers said.
Money for the city’s pension contributions comes from property taxes.
The city’s current property tax rate is $19.92 per $1,000 of taxable value.
Out of that levy, $1.59 per $1,000 of taxable value is for police and fire pensions, while $1.03 per $1,000 is for IPERS and Social Security benefits.