In the late 1980's, the Bowling Green City Commission did away with its city-run retirement plan for city police and firefighters.
The plan called for the 52 remaining retirees to receive 50 percent of their salaries for the rest of their lives. However, the fund that was set up to continually pay these former city workers and is in danger of drying up if something isn't done soon.
City commissioner Brian Strow said the retirement fund money is invested in the stock market and has stunted growth the past couple of years. That, along with a longer life expectancy is leaving the city with a problem.
"The city put away some money but that money's not grown fast enough to actually pay for all the retirement benefits that were promised," Strow said.
The shortfall leaves a $1 million gap between the amount of money the city actually has to pay those retirees and the amount of money promised by the city several years ago.
Strow said in the 2007 budget, the Commission decided to infuse money into the fund as a supplement.
It's purpose was to make sure the retirees got a three percent cost-of-life increase added into their pension. However, they did not address the bigger issue of where new money would come from to pay for these benefits.
He said right now there are only two options to fix the situation.
"Take money from the current budget for next year and meet the gap with what we project we need for the pension promises and what currently exists. It would take a little over a million up front," Strow said.
The other option would be to make payments of $250,000 to the fund over the next twenty years.
Strow said that it would be cheaper for the city to pay the $1 million now rather than push the price tag up to $4 million by paying in installments.
"For every year we let the unfunded liability go on, the unfunded liability actually increases because we wouldn't have money set aside to grow in the stock market to cover liabilities," Strow said.
He also said the Commission will look at the issue during this year's budget meetings.
Strow said there is enough money to pay all of the retirees their benefits for next few years.
The city's current retirement fund for firefighters and police officers is run by the county and the state.