The St. Louis Art Museum is facing a possible deficit of $9 million as a result of an unfunded liability in the city’s Employees Retirement System (ERS). That amount is nearly one-third of the museum’s $29 million 2014 budget.
The city, the Zoo and the St. Louis Public Library are also part of the ERS, as are 10 smaller agencies. The city, which is the largest member of the plan, has not yet responded to calls from St. Louis Public Radio but the other three entities say they’re up to date on their pension payments.
The issue came to light during a Thursday meeting, in which the museum presented its 2014 budget to the Zoo-Museum District board. In response to ZMD questions, museum attorney David Linenbroker noted his concern.
“Somebody could be left holding the bag,” Linenbroker said.
In its spending plan, the museum has allotted $80,000 for a consultant to look into other options.
“We may be able to get out of [the pension plan],” Linenbroker said.
All members of the retirement system are proportionately liable for the total deficit. Still, the art museum’s deputy director and controller Carolyn Schmidt told St. Louis Public Radio that it’s highly unlikely the museum will ultimately be responsible for the $9 million.
“This is really an accounting issue, a non-cash paper transaction if you will. I don’t anticipate that we would be writing a check for this,” Schmidt said.
Library CFO William Jackson explained that what the museum is calling an unfunded liability is the result of a recent change in accounting rules. Until now, ERS members have not had to carry that debt on their balance sheets.
“It’s a juggling act,” Jackson said. “It’s an estimate of what everybody would have to pay out if everybody retired right now.”
The Library will not be required to carry the deficit on its books until September 2015, Jackson said.
A spokesperson for the city said, "The premise of the question (about the Art Museum being penalized for another's shortfall) isn't accurate.
"The existence of an 'unfunded liability' is an actuarial term and references expected future liabilities. The liabilities referenced in the term 'unfunded liabilities' are expected future liabilities to pay pension benefits of current employees. If there's an ongoing, operating plan with 100 percent funded liabilities, the city counselor's office hasn't heard of it.
"So, yes, the City of St. Louis is up to date in what it is supposed to have paid into the pension plan. The City pays the full amount due to ERS each year, based on a calculation by the ERS actuary."
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