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City upgrades employee retirement plan
Taxpayers, customers and future employees to fund it
Charles W. Penny Web.jpg
Statesboro City Manager Charles W. Penny

The city of Statesboro’s 300-plus employees have a more generous retirement plan beginning Jan. 1 and will be able to retire with full benefits after 30 years of service, regardless of age.

Previously, police and firefighters could retire with full benefits after 25 years but could not collect any retirement benefits until they were 55 years old, according to the city’s Human Resources Department.

Statesboro’s other city employees had to reach age 65 and have 30 years of qualified service to collect at the full rate. Those retiring younger than 65 or with less than 30 years drew reduced benefits.

Meanwhile, the old benefit formula also used a factor that City Manager Charles Penny said limited retirement pay for many employees to about one-third their final salary. At his recommendation, City Council unanimously approved a revised retirement plan Dec. 17 that includes the change in eligibility years, eliminates the age requirement and increases the factor so that full benefits will now exceed half of final average earnings.

“This is a significant change to our retirement system,” Penny told the council. “It will mean increased retirement benefits for our current employees. Current employees will not be required to contribute to the plan. But more importantly, the significance of it is that our employees will be able to retire after 30 years of service and they will not have to wait until they’re age 65 to begin drawing benefits.”

As he also recommended, the city will now allow employees to accrue sick leave without limit. They previously could get credit for a maximum of one year of unused sick leave. They still cannot cash in the accrued leave directly, but they can use it toward years of service in the retirement formula.

Statesboro’s plan is part of the Georgia Municipal Employees Benefit System, maintained by the Georgia Municipal Association. However, the city chooses the terms of its participation.

“Statesboro, this is a big deal,” Mayor Jonathan McCollar said after the 5-0 vote.


Who pays for it?

As Penny noted, employees already on the payroll in 2019 will not be asked to contribute. For them, the retirement system continues to be entirely funded by their employer, the city government, from its revenue sources.

But new employees, hired Jan. 1, 2020, or later, will contribute to the retirement system through a 3% payroll deduction.

Meanwhile, the city’s contribution, currently the equivalent of 6% of payroll, will increase to 8.05% of payroll.

Statesboro taxpayers and customers of the water and sewer, natural gas and storm drainage systems will indirectly help pay for the more generous plan. But with the city’s revenue now building reserves, no tax or fee increases have been proposed at this point to support these changes.

The total cost to the city is projected at about $300,000 annually, with about $170,000 of that to come from the general fund, Penny told the mayor and council in a memo. The general fund is the part of the city budget funded in large part by property tax.

“But the retirement program is so well funded, and the change that we made for new employees coming on beginning in January, where they’ll contribute 3% of their salary toward retirement, that will also help in the future to bring the percentage (that the city pays) down,” Penny said after the meeting.


Recruitment tool

Penny, who arrived as Statesboro’s city manager July 1 after retiring as a city manager in North Carolina, sees the retirement upgrade as an important tool as he seeks to fix the problem of hard-to-fill staffing vacancies in some departments.

“This  is important for us to be able to recruit good people, and we’ve run into a situation … where we try to recruit somebody from another city and they look at our retirement plan, they look at the one they have, and they’re like, ‘No, we’re not coming,” he said.

Under the old plan, a factor of 1.25% was multiplied by the final average earnings, in turn multiplied by credited years of service. The new factor is 2%.

In examples Penny provided to the council, police and firefighters fared worst in terms of actual benefits under the old system, though they could retire younger. An officer with final average earnings of $55,000 a year received retirement pay of about $17,188, or less than one-third of the working salary. After 25 years, under the new plan the officer would qualify for retirement pay of $27,500.

For midrange non-public-safety employees, retirement benefits were already about 50% of their final pay, but will rise to about 60%.

The system also offers portability. For example, someone who has 25 years’ experience working for other cities could come to work for Statesboro and retire after five more years, Penny said.

“Then we’re not paying for the full 30,” he said. “We’re just paying the retirement on the five years that they actually work for Statesboro. It’s a big deal.”


Mayor praises council

McCollar hailed the retirement upgrade as part of City Council ending the year – and the term in office for three of the five members – on a positive note

McCollar Jonathan 2018 W
Mayor Jonathan McCollar
. The motion was made by Councilman Jeff Yawn, who is one of those leaving, and seconded by Councilman John Riggs, one of the two members continuing.

“We’ve had some tough debates in this chamber, but this council has done some phenomenal things over the past two years,” McCollar said.

“From the economic development projects that we have to the commissions that we’ve established, to the GICH (Georgia Initiative for Community Housing) program that we’ve gotten into, this council has done some great things, and tonight they ended it on a great note by reshaping the retirement plan that’s going to lift up and reward the city employees for all of the work that they have done,” he said.


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