☆ Without a defined benefit pension plan, can a city attract public safety workers? (1/4)
Image generated using Dall-E
Along with most of its service delivery, Sandy Springs, GA, privatized public employee retirement benefits when it incorporated in 2005. Despite later bringing some city services—and jobs—inhouse, the defined contribution model remained in place. To this day, Sandy Springs has zero retirement liability. But are they a competitive employer? We caught up with Mayor Rusty Paul and City Manager Eden Freeman for an Opp Now exclusive Q&A.
Opportunity Now: We were talking to Len Gilroy from the Reason Foundation, and he still seemed pretty optimistic about Sandy Spring’s success being largely privatized, despite moving many services inhouse. He made the point that your city started out with zero liabilities for pensions and retirement plans. Is that still the case?
Mayor Rusty Paul: Yeah, we have a defined contribution rather than a defined benefit plan, where the city is pretty generous putting money into retirement. It’s a 401(k)-type plan and a 457 plan.
So we have options, and opportunities for the employees to really control their retirement, which they like, and they can track their retirement earnings and adapt to whatever their priorities are.
At the end, they have a pretty generous little nest egg that not only goes for retirement, but also helps build generational wealth. We think it's a better model than, say, you retire at 65, then you die at 66, you lose the money, and your family doesn't get the benefit of it.
EF: We put 12% of an employee's salary into a 401(k), and then we will match them up to 5% of their deposits into a 457. So they can receive up to 22% of their annual salary into their retirement.
We have some folks who've been with us shortly after incorporation that are millionaires.
RP: If I had that in my private sector jobs, I'd be retired now, too.
ON: Yet even the Reason Foundation, on the topic of reforming government pensions, encourages striking a happy medium, offering choice between defined benefit and defined contribution plans.
EF: One of the big values from the beginning was about not having long-term liabilities. In Georgia, we do not have a statewide pension program for local government employees. Every municipality does their own thing. Some municipalities have a defined benefit program. Others have what we have.
ON: Are you able to stay competitive when hiring, despite not offering the pension option?
RP: We're the only police department I know who has a waiting list for officers to join the force.
ON: That’s surprising, especially in today’s climate—
RP: That’s what I mean. It has not hurt our ability to recruit, particularly police officers.
Follow Opportunity Now on Twitter @svopportunity
We prize letters from our thoughtful readers. Typed on a Smith Corona. Written in longhand on fine stationery. Scribbled on a napkin. Hey, even composed on email. Feel free to send your comments to us at opportunitynowsv@gmail.com or (snail mail) 1590 Calaveras Ave., SJ, CA 95126. Remember to be thoughtful and polite. We will post letters on an irregular basis on the main Opp Now site.