The city of Cottonwood has an obligation to pay the pensions of the men and women who have served in its police and fire departments.
The problem is that those funds have been underfunded for more than a decade.
“In simple terms, currently there is not enough money in the plans to cover their/our future obligations to retirees,” Cottonwood Administrative Services General Manager Rudy Rodriguez said.
“I use the term their/our, because both the retirement plans as well as the communities share the responsibility of providing for our retirees.”
It’s been a known problem for quite some time, Rodriguez said.
Two new relatively recent rules approved by the Government Accounting Standards Board in 2012 mean the city will have to record its liability for what it owes in pensions on its own books.
Currently, the city owes just over $9 million in pensions through the Public Safety Personnel Retirement System.
Around $1.5 million of that is for the Cottonwood Fire Department and about $7.6 million is for the Cottonwood Police Department.
“Until now governments were not required to record their pension liabilities on their books,” Rodriguez wrote. “Municipalities viewed the underfunding as a pension plan problem.”
The city is looking for solutions to the problem.
To read the full story, see the Wednesday, May 6, edition of the Cottonwood Journal Extra.
