Morgantown officials report improved funded status for police and fire pensions after $5.7 million employer deposits

Morgantown finance staff presented the fiscal year 2025 annual financial reports for the police and fire pension and relief funds during the Committee of the Whole meeting Sept. 30 at City Hall.

The reports, presented by John Ferguson, the city’s finance director, said the city used a one‑time employer contribution—drawn from municipal sales‑tax receipts set aside in the retirement fund—to deposit $5,078,000 into each pension on Jan. 8, 2025, and additional municipal sales‑tax allocations later in the fiscal year. Ferguson reported that the police pension’s John Hancock investment account increased by roughly $7.5 million in the year and the fire pension’s account rose about $7.0 million.

Why it matters: both plans had low funded ratios going into the year and the city in January approved closing the existing police and fire pension plans to new entrants effective July 1, 2025 while selecting an “option 2” funding method to finance unfunded actuarial accrued liabilities over a 38‑year schedule. That change, combined with the one‑time deposits and investment returns, produced measurable short‑term improvements in funded status.

Ferguson said, “City council approved the closing of the police and fire pension funds to new entrants...and choosing the optional 2 method to finance the unfunded actuarially accrued liability of the existing pension plans.” He added, “We now have a plan moving forward over a 38 year period to fully fund this plan.”

Key numbers from the presentations: for the police plan Ferguson said employee contributions totaled about $464,000 and the city’s required contribution under the previous method was about $1,494,000; the extra employer contribution totaled $5,700,000 overall (split between police and fire). The police fund’s net investment income for the year was reported as $2,190,000 and the total investment return about 9.49%. Ferguson said the police plan’s funded ratio rose from about 21.25% at the prior valuation to 29.76% on the actuarial valuation dated July 1, 2024.

For the fire fund Ferguson reported employee contributions near $364,600, total employer contributions on the old method of about $1,042,000, matching $5,700,000 extra employer contributions and total net investment income of approximately $1,938,433. He said the fire plan’s funded percentage rose from roughly 23.81% to about 33.28% on the same valuation date; the fund’s overall return was reported at 9.31%.

Councilors pressed for follow‑up tracking. One councilor asked whether staff could present how the plans are performing relative to the projections that accompanied the selection of option 2. Ferguson said he did not have the projection tables in front of him but agreed that staff could provide a comparison of actual results against the funding plan going forward. He also confirmed that the one‑time $5.7 million came from municipal sales‑tax receipts that had been held in the retirement fund for that purpose.

Ferguson noted constraints on the pension investment allocations set by the Municipal Pension Oversight Board and cautioned that returns cannot be guaranteed. He also answered questions about other revenue items the funds received; for example, the police fund received approximately $839,900 from the West Virginia surcharge tax in FY2025, which had been deposited into its investment account.

Council direction and next steps: council members asked staff to provide ongoing updates comparing actual results to the actuarial projections used when option 2 was adopted and to present a clearer, year‑over‑year tracking graphic. Ferguson agreed to supply that material in future reports.

The Committee of the Whole did not take a formal vote on policy changes during the presentation; the reports were delivered as required financial disclosures and to maintain eligibility for state funds.