The Clintonville Common Council was informed that the city currently owes $1.1 million in unfunded pension liability.
The council received the news from Interim City Administrator Chuck Kell at its meeting Monday, March 16.
“This is a 1,000 pound gorilla I didn’t want to have to tell you about,” Kell said.
He said after he read a news story by Gannett regarding unfunded pension liabilities for cities in Wisconsin and doing some research, he found that Clintonville has more than $1 million in unfunded pension liability.
“Quite frankly that’s a lot of money,” Kell said.
Most communities have tried to eliminate this debt, Kell said.
“The problem really for Clintonville, and probably the reason this hasn’t been paid in the past, is the interest the state was charging was probably not a whole lot different than what you could have borrowed money at and paid it off,” Kell said.
He added that the economy has changed over the years, and the state is now charging 7.2 percent on the unpaid balance every year.
Kell told the council that in the 2015 budget there is an allocation of 2 percent that the city pays the state. This amounts to $49,614.
“The problem is that the interest is costing you $79,227 every year you wait,” Kell said. “If you wait another 10 or 20 years this number is going to be humongous.”
Kell recommended sending the issue to the Finance Committee for further review.
A discussion about the city’s current auditor ensued and how it should have informed the city about this liability.
A motion was made and passed to refer the unfunded pension liability to the Finance Committee.
Council President Jeannie Schley also requested that the city’s auditor be at the Finance Committee meeting when this is discussed.