2013-12-12 / Front Page

Pension Funds Prosper Sugar, Spice and Everything Nice

By Tom Shevlin
By Shawna E.M. Snyder

The Elf on the Shelf has become another muchanticipated holiday tradition for children and parents alike. The Elf on the Shelf has become another muchanticipated holiday tradition for children and parents alike. The city’s police pension fund realized a robust return of 12.6 percent last year, bringing its total assets as of June 30 to roughly $48.4 million. Meanwhile, the city’s fire department pension fund reported a similarly strong 12.2 percent return over the previous year, yielding a market value of $37.7 million as of June 30.

Both of the funds’ performance were outlined in a report by the Virginia based Hay Group, which also noted that despite recent progress, both plans are still considered to be in “critical status” – that is, having a funding level of less than 60 percent.

Still, with a strong stock market generating greater-than-expected returns, the city-managed pension funds provide a bright spot for what is shaping up to be yet an- other challenging budget climate heading into next spring.

Ron MacDonald’s personal favorite is a collection of several custom-built cottages, each showcasing a different Christmas theme. 
(Photo by Jack Kelly) Ron MacDonald’s personal favorite is a collection of several custom-built cottages, each showcasing a different Christmas theme. (Photo by Jack Kelly) Further, as the Hay Group notes, if the city continues to fully fund its annual contribution, the police department plan should exceed the 60 percent funding level by the end of 2016.

The fire department plan, however, will likely take longer. According to the report, assuming that the city continues to fund the plan as scheduled, that plan will emerge from critical status in 2024.

In all, the city contributed $4.8 million to the fire department pension plan in 2013, while member contributions totaled $501,000. Investment returns of $4.2 million rounded out the fund’s total yield of just over $9.5 million. Of that sum, $5.4 million in retiree benefit payments were dispersed, or roughly 56 percent of the fund’s revenue for 2013.

Shawna E.M. Snyder, of Newport, is a mother of two young girls and a Doctor of Acupuncture. Shawna E.M. Snyder, of Newport, is a mother of two young girls and a Doctor of Acupuncture. The police plan performed similarly, with $3.4 million in contributions coming from the city, $403,000 from member contributions, and $5.6 million the investment income, resulting in $9.5 million in total receipts for the year.

Of that, $4.4 million was paid out in the form of retiree benefit payments, or roughly 46 percent of the total year’s income.

According to data compiled by the city’s finance department, Newport’s police pension system is currently 58.4 percent funded, roughly six percent higher than it was in 2011, and well above its 10-year low, in 2002, when it was just 42.5 percent funded.

In all, the city’s total unfunded liabilities owed to current and retired police personnel amount to $82.8 million.

On the fire department side, the liabilities are even greater, with the unfunded liabilities totaling $93.8 million and a funding rate of just 39.1 percent for 2013. And while that’s still better than the 27.9 percent that the city reported in 2002, it’s still a long way from where the fund needs to be.

“There’s some work still to be done,” said City Manager Jane Howington, who also expressed concern that the school department’s unfunded pension liabilities is an area that still needs attention.

However, Howington said that she’s confident that if the city remains disciplined in following the plan Finance Director Laura Sitrin has put in place, Newport will ensure its long-term fiscal health.

“The plan we put together is a solid plan, and if we stay the course, and if we give people like Laura and the Trust and Investment Commission the latitude to make decisions, then we’re going to continue to see some good results,” she said.

Newport Mayor Henry F. Winthrop agreed.

“I think we’re lucky to have one of the finest finance directors in the state – if not the finest finance director in the state – as well as a very impressive collection of talent on the Trust and Investment Commission,” he said. “It’s their acumen that’s made the difference.”

As for whether the positive trend will translate into a more relaxed budgeting approach, Howington said that is not likely.

“I don’t think we’re going to change our budgeting outlook and process because of one year,” she said. “We just have to continue in this [positive] direction.”

Again, Winthrop agreed.

“It’s not a one-year thing,” he said, adding, “we’re in it for the long haul. But when you look at it holistically, we’re doing pretty well.”

With Christmas fast approaching, Newport is in full swing with Santa sightings, gingerbread mansions, readings of “The Night Before Christmas,” and “Nutcracker” performances. We are immersed in glittering lights, Nativity scenes, carols, Advent calendars, and even those everso fashionable holiday sweaters. There is so much excitement all over town and such a plethora of traditions and activities from which to choose, it can be a challenge for a young family to select just a few favorites. Trying to “do it all” can add to the stress of an already busy season. Here are a couple of our family traditions.

When driving home past sunset, my children and I often make a few detours in order to pass by our favorite holiday decorations, spotting Rudolph, Frosty the Snowman, and Santa and his elves in many neighborhoods, but one spot is a particular treat for us: Ellery Street in Middletown.

Ron MacDonald has been dazzling people with his Christmas enthusiasm for the last 25 years; his whole family fully embraces the holiday spirit and puts on a magical exhibit of Christmas cheer at their home. You’ll be mesmerized by twinkling lights, hear the sounds of Christmas music, and witness a digital countdown to Santa’s arrival. The highlight of the display – and MacDonald’s personal favorite – is a collection of several custom-built cottages, each showcasing a different Christmas theme. There is the Candy Factory, the Workshop, the Castle, the Bakery, the Gingerbread Village, and the Reindeer Barn. Designed and built by MacDonald and a devoted friend for whom the Charlieville Gingerbread Village is named, these exquisite creations are labors of love. Each house takes up to five months to build; they are constructed after work, in the evenings, and on weekends, and many pieces of the collection are hand painted.

Each year the display has a different focal point; this season it’s the Christmas toy soldiers lined up at the entrance to welcome guests. MacDonald’s exhibit draws crowds, some coming by the busload. “As you can imagine, it gets quite busy on this usually quiet street, but the neighbors have never complained,” says MacDonald, adding, “I’m just glad everyone enjoys it.” He is already dreaming up next year’s design.

The Elf on the Shelf has become another much-anticipated holiday tradition for children and parents alike. The idea behind it is based on a book written by Carol Aebersold and daughter Chanda Bell. The elf is a special scout sent from the North Pole. When a family adopts an elf and gives it a name, the elf receives a bit of Christmas magic and can fly back to Santa each night to recount the events of the day.

Each morning, the elf returns to its family and perches in a different place of the house to watch and listen. When adopting an elf, there are two simple rules that every child must know. First, an elf cannot be touched; Christmas magic is very fragile, and if an elf is touched it may lose its ability to fly back to the North Pole. Second, an elf cannot be active while anyone is in the same room. An elf’s job is to sit quietly, watch, and listen so that it can help Santa manage his Nice and Naughty lists.

Our elf, Alfie, made a grand appearance at our house on the first day of December.

He gave each girl, ages 4 and 6, a Christmas card expressing his joy at being back with our family. He also mentioned that he’s been communicating with his elf friends who reside in the girls’ classrooms, and they report that the girls have been working very hard; so far, they are at the top of the Nice list.

Alfie is starting out sweet this season because last year he was a bit mischievous, an elf characteristic. At his worst, he broke into the gingerbread houses that the girls had made, eating half of one and leaving a trail of peppermint candy and cookie crumbs in his wake. Shameful! Afterwards, he left a plate of home-baked snickerdoodle cookies and a note expressing a most sincere apology. He explained that it’s hard to be good all the time, hoping the girls would understand. Alfie is not alone in his occasional behavioral lapses; other elves have been caught drinking maple syrup with a straw, napping on a bed of marshmallows, making elf-size pancakes, and finding themselves in compromised situations – like being tied up and held hostage by toy soldiers. These elves are here to watch over the family to help keep delinquency to a minimum, but they sometimes have a mind of their own and one’s imagination can go haywire. The possibilities are endless!

Whichever holiday customs you embrace as part of your family’s traditions, do so with one goal in mind: to bring your loved ones together amid the hustle and bustle of the season. Share the simple joys of Christmas magic and you will create enduring memories for your whole family.

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