Rolla Municipal Utilities wanted to improve the benefit package for its workers in an effort to help recruit and retain quality employees. So in 2008, the board of RMU decided to enhance LAGERS benefits to the 2% multiplier.
“In 2008 we had a very well-funded plan, another reason it made the change a little easier at that time was the fact that we were slightly overfunded,” said Rodney Bourne, General Manager of RMU.
Being overfunded basically means that RMU had completely paid off its unfunded liability and, at that time, had slightly higher assets in LAGERS than it had liabilities for retirement benefits. But that all changed when the recession hit later that same year.
“In the combination of changing plans and the markets going down, we went from being slightly overfunded to significantly underfunded in a matter of two years,” Rodney said. “A lot of that was attributed to the markets.”
RMU again had an unfunded liability. And even though LAGERS provides a sound, structured method to pay of this liability, RMU had other plans.
“We knew the markets, over time, would recover but what we chose to do is to make additional payments toward our unfunded accrued liability to help in that recovery,” said Rodney.
Continue Reading to find out how RMU addressed their unfunded liability.