When budget hearings began, the amount needed by City of Memphis to fully fund the pension plan was $80 million a year. City of Memphis had been paying $20 million of the $100 million needed for the ARC (Annual Required Contribution) since the Great Recession, leaving a balance due that was growing each year.
The ARC increased dramatically by $50 million from 2008 to 2009, and with the continued $20 million payments a year until the present fiscal year, the amount of the ARC grew to the current level of $100 million a year. As a result, the pension funded ratio fell from 103% to under 75%.
All public pension plans come with an ARC. The figure varies from plan-to-plan and year-to-year, but it represents a mathematical calculation of how much an employer (in this case, City of Memphis) must pay into the plan to balance the long-term investment returns and payments to beneficiaries.
$80.0 million – Current Gap in ARC Payment
$84.4 million – Increases to Police and Fire Budgets (2005-2015)
67% – Police and Fire Expenditures as Percentage of City Operating Budget (2014)
78% – Percentage of City’s Total Authorized Fulltime Employees in Police and Fire Divisions (2013)
22% – Percentage of Authorized Fulltime Employees in Parks, Roads, Engineering, Libraries,
Community Centers, Information Services, General Services, Human Resources,
Finance, Public Works, City Court, etc. (2013)
403 – Number of new sworn officers hired between 2005-2012 – 26% increase.
Officers per capita:
6.14 – Memphis.
6.03 – Chattanooga
5.43 – Knoxville
4.94 – Nashville
Sources: City of Memphis Budgets, Multi-Year Strategic Fiscal Report, CAFR, PwC