Mayor Stacy Kinder on LAGERS and ARPA


The Cape City Council had our first “workshop” work session on June 22. No action was taken, but we discussed issues that have been on the table for a while, or that will need action soon. One pressing topic is the issue of buying into a higher level of retirement benefit in our employee pension program. Doing so would also impact how we spend American Rescue Plan Act (ARPA) funds.
 
Our city uses the Missouri Local Government Employees Retirement System (LAGERS) to provide retirement, disability, and survivor benefits to our city employees. The LAGERS pension formula we use to determine monthly payment in retirement is: (benefit multiplier) x (final avg salary) x (yrs service).  In Cape, our benefit multiplier has been 1.75%, which was increased from 1.50% four years ago. Practically all other municipalities in our region use a benefit multiplier of 2%, which is the highest level that can be obtained. The difference in annual benefit will obviously vary, but moving from 1.75% to 2% can easily earn several thousand additional dollars annually in retirement. The reason the city has fallen behind our surrounding municipalities in providing a higher benefit is obviously cost—a total one-time buy-in will cost the city $4,438,700. 
 
I will remind everyone that the city has received one-time ARPA funds of $8,280,000.  The city has already opted to $3,602,000 in uses set forth in “Interim Rules” from the US Treasury Department, specifically for public safety and infrastructure:
– $90,850 for public safety health and wellness programs
– $178,200 for ShotSpotter technology and contract
– $3,262,000 for sewer repairs
– $70,500 for fiber cable installation
We are left with a balance of $4,678,000 to use within two years, under the newer “Final Rule” from the Treasury, which states that funds may be used for any service provided by the local government, or can be allocated to the city’s general fund. From the general fund, the city can use this converted ARPA funding in ways it sees fit.  This council and staff intends to use this funding in a way that signifies its one-time nature, while also making a profound impact in its use. Much more public discussion will occur in coming months on possible designations for this ARPA funding.
 
The LAGERS issue is one the council wanted to discuss first in our consideration of remaining ARPA funds, as it is a one-time buy-in that will have significant impact on our city’s current and future employees, but also carries a high cost. One possible scenario suggested by city staff is to put $3,000,000 into the LAGERS upgrade now, use $558,000 from the city’s Utility Fund, and pay out the remaining $880,700 from general funds over the next 20 years. This was confirmed with LAGERS as an acceptable way to provide a benefit now, while also being able to afford general funding for the remaining portion over the next 20 years. Under this scenario, the city would then have remaining ARPA money (approximately $1,678,000) to use locally. The concept of using less than $3,000,000 for LAGERS, and deferring the remaining larger buy-in, would be too much of a lift to the annual general fund.
 
As previously stated, no decisions have been made on all this, and much more public discussion will occur. The city is required to have a 45 day public comment period for LAGERS issues, so robust communication will commence on LAGERS as well as ARPA funding to the area.
 
In the meantime, enjoy all the blessings of living in a free and democratic society—engage with your civic representatives, and enjoy our uniquely American Independence Day! With my mom hat on, I offer one last appeal…please don’t hold the Roman candle in your hand after you light it. The July 4th holiday is so much better without burnt appendages!