During the city of Killeen’s fiscal year 2018 budgeting process in May, one number jumped out: $27.6 million — the projected shortfall in the city’s operational fund by the year 2037.

But according to a presentation from City Manager Ron Olson earlier this week, that projection didn’t account for a number of initiatives the city has historically underfunded, and the projected shortfall could be closer to $50 million.

The newest projections came as part of a long-term budgeting strategy session held with the Killeen City Council at its Tuesday workshop. Olson targeted a number of recurring expenditures the city has underfunded for years, including the city employee retirement fund, deferred street maintenance, deferred city building maintenance and employee pay.

The numbers are troubling.

According to Olson’s early market comparisons, city civil service employees — including police and fire — are paid approximately 7.5 percent below market average. Non-civil service employees make a whopping 13.29 percent below market value on average.

The employee retirement fund, established through the Texas Municipal Retirement System, is only 85 percent funded with little future growth projected, and city contributions are expected to skyrocket over the coming decades.

The city’s deferred street maintenance costs — somewhere in the range of $35 million — is only about 17 percent funded in the 2018 budget. A 2013 survey of the city’s road infrastructure recommended the city budget about $1.8 million per year for maintenance expenses, however, the city only budgeted $300,000 in 2018.

Of the city’s 43 buildings, 27 will need roofs over the next 20 years, Olson said. On top of that, the city is legally obligated to replace HVAC units at all of its facilities — a cost of $360,500 this fiscal year alone.

With those needs adding up, Olson recommended the council prepare to reconsider its approach to all of those programs before the wheels come off.

The situation was most extreme for the city’s employee compensation plan, for which Olson recommended a complete tear-down.

“In order to fix the issue, we’ve got to do this different than we’ve ever done it,” Olson said. “Our system is so far out of whack that it needs to be rebuilt.”

Another option was fundamentally changing the city’s retirement fund contributions from “ad hoc,” with city matches for employee retirement benefits contributed to the fund over a 15-year timeline, to “repeating,” with benefits pre-funded.

The city also has the option of funding cost-of-living allowances for retirees and Updated Service Credits for current employees. The council voted in the last two years to not fund the credits or retiree COLA.

With a shift to “repeating,” the benefits are clear.

The retirement fund would be fully funded by 2042, as opposed to 87.7 percent funded on an “ad hoc” basis. The city’s contribution rate would double over the next couple years, remaining flat until it halved in 2042. Meanwhile, the city’s ad hoc contributions would skyrocket over the coming decades — surpassing “repeating” contributions rates by 2032.

kyleb@kdhnews.com | 254-501-7567

(4) comments

Alvin

This is the personal opinion of this writer.

And to the citizens of this community, I would like to ask: 'Are you content with letting a group of 9 who constitute the KEDC Board run this town or do you think that maybe it's time you took this town back???? What about the Chemical Plant and having a vote???? Are you city manager still content with not having a say as to what you are willing to put up with????

I think 'now' is a good time to say 'enough is enough' and let the people have a say in what this town, by voting on things like the chemical plant, the bonds, both city and school district, and the new water plant.

You know the old saying, 'power corrupts', well it's been proven time and again in this city and the way this city is governed.

This has been the personal opinion of this writer and nothing shall be used, in context or without or changed in any way without first notifying, and receiving explicit approval from this writer.
One of the 4.58 % who voted.

eyewatchingu

Why is it that this city seems to like to pay only certain people way above the going pay rate, and then turn around and let the average city worker get crumbs?

Yet our city council would choose to try for a bond for more roads that will only cause more debt to the citizens, when the city cant even fund the up keep of the roads we have.
Once again it shows the true colors of those sitting as city council members and our Mayor.

Vote no on all BONDS, force the Kings and queens of Killeen to get back in touch with reality. Vote no and force these Kings and queen to budget the money right!

Mr Olsen is right and is trying to fix problems that are from way back. I have to say I am honestly feeling sorry for Mr Olsen and the job he has ahead of him, when it comes to trying to get these kings and queens to understand how to budget Money!
Good Luck Mr. Olsen

Alvin

This is the personal opinion of this writer.

I am amazed to find this city in this point at which this city finds itself now. How long has this city been incorporated???? How long has the city directors been in their respective jobs, especially 'the city employee retirement fund, deferred street maintenance, deferred city building maintenance and employee pay.' And they have not pulled these prospective services up with the 2018 city budget.

Copy: 'City civil service employees — including police and fire — are paid approximately 7.5 percent below market average.' End of copy.

With this city giving these personnel an 11 percent raise approximately 2 years ago and 5 percent step raises and we're still 7.5 percent below market average???? And now this city is saying that we are able to give KPD a break as the call to the KPD are so high, but the 'health and safety departments' are approximately .73 percent of the city budget.

Copy: 'Non-civil service employees make a whopping 13.29 percent below market value on average.'
Continuation of copy: 'The employee retirement fund, established through the Texas Municipal Retirement System, is only 85 percent funded with little future growth projected, and city contributions are expected to skyrocket over the coming decades.'
Continuation of copy: 'The city’s deferred street maintenance costs — somewhere in the range of $35 million — is only about 17 percent funded in the 2018 budget. A 2013 survey of the city’s road infrastructure recommended the city budget about $1.8 million per year for maintenance expenses, however, the city only budgeted $300,000 in 2018.'
Continuation of copy: 'Of the city’s 43 buildings, 27 will need roofs over the next 20 years, Olson said. On top of that, the city is legally obligated to replace HVAC units at all of its facilities — a cost of $360,500 this fiscal year alone.' End of copy.

An to top it all off, this city is plowing ahead with a script that, in my opinion, only for the needs of the home builders with the now a new number of $30 Million just to widen two streets that will entice the new home owners with a new high school, with a cost of $426 Million dollars, and it is all planned as a cost for the citizens of Killeen. And this is all with the MUD 2 program that this city council just made a large guffaw as to the importance of this brand spanking new water plant that this city is on tap for once it was #30 Million and it has since climbed over approximately $45 Million and is still going. Now doesn't just tickle you in the ribs....

I wonder 'what the previous city governments were doing allowing a picture of this magnitude to continue. What is the Planning department, the Estimation department, the finance and budget department, and what were the previous mayors of this city doing according to this time line????

Copy: 'With those needs adding up, Olson recommended the council prepare to reconsider its approach to all of those programs before the wheels come off.' End of copy.

I again agree with city manager Ron Olsen and suggest a complete stoppage of the new water plant that in my estimation is not absolutely needed and this money should go to other needs.

I would suggest a temporary stoppage on all new placement of both the KPD and KFD until we can get a composite look at just what are the problems starting with the lowest ranks and going up.

Take a good hard look at what we have for rolling stock for the police department, the fire department, the garbage and trash department, and the roadways department ans see just where the greatest needs are. If this indicates we need to 'sell off the garbage and trash, including all inventory, then this should be looked at closely. In this case, all manpower associated with these departments should be considered as 'going to the highest successful bidder thus slicing a hugh chunk off of the budgetary requirements. These monies should go towards paying off our delinquency's above.

Start a program that will build surplus equity in the areas mentioned above and start getting this city back on to an even keel and get this city 'out of the red'.

You can see be the Polls that have been conducted over the past few weeks/months that the citizens are not in favor of this city going ever deeper in the hole, this weeks poll: 'Do you feel confident about the Killeen-area economy as the new year begins?' with the results as posted at Yes = 13.2 percent: No = 77.4 percent: and unknown = 9.4 percent.

With these numbers this city council will surely go over this budget combing it for all of the obvious over sold projects, underfunded projects, and other projects that can be cut back. I will also recommend that this KPD go over their budget, and with the help of the justice department comb through and see where the savings can be administered.

In my personal opinion, this is a shame that this city administrative group could not or can not do a better job than this.

No on all future bond issues and councilman Harris, see where the hole is and plug this dyke and start with this new water plant. Keep the pressure on our, in my opinion, delinquent city council.


This has been the personal opinion of this writer and nothing shall be used, in context or without or changed in any way without first notifying, and receiving explicit approval from this writer.
One of the 4.58 % who voted.

SnowWhiteNthe7Thieves

The leaders of KILLeen have somehow misplaced an additional $25,000,000 of your money. Did they buy 5 more churches? Only in KILLeen will you find this bizarre, brazen sheet.....

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