Mar 7, 2014 7:07 PM
CORPUS CHRISTI - A recent audit of the City's Financial Department discovered that because of a new national standard coming up next year the city will have to pay more money into the retirement fund. The problem is, the city says it doesn't have the money.
The new standard is coming from the Government Accounting Standards Board. That organization sets the national standards for how Municipalities conduct their finances. Because of the organization's new retirement standard, our city will be millions of dollars in debt for the next few years.
On the city's annual financial statement for 2015, they'll have to show a $90 million debt.
"And that's going to be reflected on our... On the very top financial statement. The very first one you see in our comprehensive annual financial report," said Director of Financial Services Constance Sanchez.
That was something the city was trying to avoid. That's because the high dollar debt puts the city at risk for higher interest rates on bond obligations, and that takes extra tax dollars to pay off.
This is all because of the new national standard requiring cities to put more money into their retirement fund.
The city knew this was coming, so they tried to stay ahead of the curve. Last year, the state standard for matching retirement funds was 10.51 percent. The city contributed more, matching at 14.8 percent making their contribution a little more than 16 million dollars. The new national standard going into affect next year will require the city to put in 20.78 percent into the fund.
"And so we are addressing it even before we're required to address it," said Sanchez.
But unfortunately it's not at the level needed. So for the next few years our annual financial statement will show a pretty large debt. The city has a plan to have it taken care of by 2020.
"And so for the next six years it's a goal of our city manager and the city management to increase the funding levels incrementally over time, if financially feasible, to that higher level so we will be fully funded," said Sanchez.
Sanchez says the plan is to not raise taxes, rather they will take money from other funds.
Now, the city doesn't have to follow the new national standards but if it doesn't it considered a black mark on their financial records. That means the city could have trouble getting needed bonds and grants for various projects. I'm told the city doesn't want to take that risk.
4 hours ago
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