Officials with the city of Bogalusa say that the retirement system has been under-funded for years, drawing the attention of state auditors.

Stacy Smith, director of administration for the city of Bogalusa, said that the City of Bogalusa Employees’ Retirement System (COBERS) is the retirement system for the employees in the public works department, the utilities department, and most office employees. It is funded by the city contributing 11 percent of wages, and the employees contributing 6 percent.

“For most of these employees and retirees, this is the only retirement system they have because they do not contribute to Social Security,” Smith said. “If it fails, most of the current retirees will have no income.”

Smith said that the system has been under-funded for years, which means that there are more retirees withdrawing from the system than there are employees contributing to COBERS. Financial statements indicate that COBERS has been under-funded since at least the year 2000, Smith said.

“According to the actuary for COBERS, as of June 30, 2016, it was under-funded by more than $13 million, and it currently needs more than $900,000 a year of extra contributions to make it financially sound,” said Smith, adding that if the city does nothing, the system will be bankrupt by 2021.

The problem has been escalating for years.

In the city’s audit for the 2006 year, the auditor wrote: “Total assets of the system at June 30, 2006, was $6,099,761 with an actuarial accrued liability of $14,269,074, resulting in an unfunded actuarial accrued liability of $8,169,313.” The auditor’s recommendation in 2007 was “The city should develop a correction action plan to generate additional revenue to ensure proper funding of the retirement system, as required by state law.”

Ten years later, in September 2017, several members of the current administration met with representatives from the State Legislative Auditor’s Office to discuss the options available for the retirement system. Those in attendance included Bogalusa Mayor Wendy Perrette, State Sen. Beth Mizell, State Rep. Malinda White, then-City Council President Tamira Smith, and Stacy Smith.

“The Legislative Auditor’s Office is adamant that the city find a way to fund the retirement properly,” Stacy Smith said. “If not, it will be bankrupt. This is not really an option, as far as the Legislative Auditor’s Office is concerned.”

As a solution to the under-funding of the retirement system, the city is holding a ballot referendum that would add 12 mills to the city’s current property tax. Early voting is already completed, and the election day is this Saturday. If the measure passes, it would be a 25-percent increase in current property tax rates.

“The only options available for the city to come up with these (retirement) funds are by making significant cuts throughout the city or by increasing revenues through a tax,” Smith said. “Salaries and benefits make up a large portion of the current budget, and those would be the first items looked at for cuts.

“It would take a lot of employees being cut to raise over $900,000, and the city is already short-staffed in many areas. So, rather than looking at cuts, the city asked for this tax.

“If the tax does not pass, the problem with COBERS will not go away. The legislative auditors will stay on Bogalusa until the problem is resolved. Something will still need to be done.”

Opponents of the tax measure say that is unfair because it only financially penalizes property owners, unlike a more equitable tax like a sales tax. They also say that it could make a serious impact on those who are already living on a tight budget and with a limited fixed income.