Dear Friends,
Tomorrow, during the Work Session under agenda item 8, City Council will be told that the market impact of COVID-19 on the pensions of approximately 4,400 plan participants is $58 million in the current fiscal year (ending September 1).
They will also be told that the City’s planned 12-week salary reduction starting May 24 will result in a decrease in contributions to the fund, and so will the hiring freeze.
Slide 4 of the City’s Powerpoint indicates that the Russell 3000 Index has a YTD fiscal return of -12.19% (see attached).
The stock market has partially recovered from the worst, and that is largely because of the federal stimuli. Corporate earnings reports, however, may drive markets lower before they get higher, and this may worsen the impact on the City’s pensions system.
Of course, if the City has to extend extend the pay cuts or eventually furlough employees, the problem can only get worse.
I hope that our City staff will come up with the appropriate solutions to address this grave problem.
Max