Dothan Retirement Debt

By: Erica Proffer Email
By: Erica Proffer Email

The city of Dothan owes around $99 million dollars to its retirement account.

Leaders have been trying to lower that debt for over three years now, but have yet to make any significant progress.

Longer lives are causing a deeper debt for the city of Dothan.

Back in October 2004, the city joined the Retirement System of Alabama.

At that time, the city had an $85-million dollar debt owed to its retirement account.

Now, despite sending millions of dollars each year to RSA, the city owes $99 million dollars.

"It's the old story that money wasn't set aside earlier, so now, it's set aside to fulfill the obligation that the city made to its employees. Therefore, based on the new assumption of people living longer and the added time people bought in, this point and time we have made no progress," says City Manager Mike West.

The way the city is trying to make up that deficit is by paying 22.7 percent of each worker's salary to the retirement system.

Most cities pay around seven to eight percent...

So, with nearly 1000 city workers, that adds up to a tab of over $4 million dollars a year.

"The real impact is these are funds that if the city would have, if the city would have maintained a sound retirement system, these funds could be use for other things. We're about to go over the hump. We anticipate that we should start making steady progress as we continue down the road," says West.

Despite the large debt, West says no workers are expected to loose any retirement money.

Dothan Public Safety workers had the option of buying five extra years of retirement benefits; 318-workers bought in, and Dothan must match that payment.

Leaders expect it to take around 20 years for Dothan to pay off its full retirement debt.


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