Council keeps committee recommendation to not allow 80 employees to switch pension plans after new information is weighed and debated. New gaming and business license categories also are created in a 5-4 vote with no more discussion.
After a lengthy discussion, Dover City Council upheld a committee decision, in a 6-3 vote, not to allow 82 city employees the option of switching pension plans.
During the Sept. 28 meeting, council members cited legality along with potential liability and cost to the city to not permit employee buy-in from the 401(a) plan to the city’s defined benefit pension plan.
When questioned by some council members, Controller/Treasurer Donna Mitchell said the city’s contract lawyer reported allowing the buy-in could potentially risk hurting Dover’s tax-exempt status.
Councilman William McGlumphy said he was uncomfortable going back on the 1994 forms employees signed when they went to the 401(a) plan in the first place.
“I understand this is a one-time irrevocable decision,” he read from the form.
He also felt the switch would hamper the city’s already high unfunded liability for its pensions, something echoed earlier by Councilman Thomas Leary.
Some members of council like Councilman James McGiffin wanted more information and dialogue with the employees impacted. Councilman Timothy Slavin said he would appreciate knowing exactly how the employees in question would react, such as which ones would buy-in to see if it meets council’s comfort level.
Others, including Councilman Eugene Ruane said after many months on the issue he felt council had adequate information already.
Employees in the 401(a) plan who spoke wanted more choices. Jason Osika said he could afford to buy-in to the plan even with its high price, which is why he wanted the option. He also asked to send the motion back the committee or allow a new pension plan.
“We want to be able to retire with a good pension and with this plan that’s not possible,” he said.
Actuary Al Pike, who made an independent analysis of a switch from the 401(a) plan to the defined benefit plan, said it’s actually more common to let people start a new plan rather than buy-in because it’s assured to be cost neutral to the city.
Another employee said he didn’t have enough in his accounts to pay for the switch but wanted others to have the chance.
City Manager Tony DePrima, who is enrolled in the 401(a) plan, felt the previous presentation to the committee didn’t reflect what the employees asked, which was to see what it would cost for them to buy-in to a new plan with no liability on the city’s part, or allow employees to discuss the matter fully.
He also said the impact to the budget reported was more than should have been because employees would take responsibility for any past liability, meaning the city’s contribution wouldn’t have to be 27%.
The report — supported by data from Pike and prepared by Mitchell, who also is in the 401(a) plan — predicted a cost to the city of up to $836,000 to allow the switch. After the Sept. 14 committee meeting where she made her presentation, Mitchell explained under the 401(a) plan the city doesn’t have to make up market losses but with the defined benefit plan it does.
IN OTHER BUSINESS…
With no debate but a split 5-4 vote, council gave final approval on several new gaming and business licenses while deleting seven rarely used business license categories.
The city’s revenue for the changes is expected to go up $17,000 to $28,000.
The city will charge $150 for a gaming position license, which will help offset losses from any slot machines — licensed at $121 a piece — replaced with table games. An expected net revenue increase of $5,510 is anticipated.
Taking comments from Dover Downs Hotel & Casino into account, sports betting and horse racing activities will be licensed separately by taking $0.00046 on the racinos’ commission on bets and racing at that location.
Public Services Manager Scott Koenig said the expected new revenue from the sports betting and hose racing activities was estimated to be $2,300 to $4,600 per activity. However, with limited sports betting being allowed, that likely will be on the low end of the range.
New licenses for off bank premise ATMs, fitness trainers, at-home day care and real estate development corporations are estimated to bring in $7,000 to $14,000.
Eliminated licenses that now will be licensed in the “all other” category are bowling alley operator, dental lab, outdoor music festival promoter, taxidermist, parking lot or garage operator, television repairman and telephone answering service.
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