Birmingham’s mayor told the City Council on Tuesday that a proposal to increase monthly pension benefits by $400 would cost the city $18 million from its operating budget. That’s in addition to the $35 million city officials already budgeted to fund the retirement program.

Birmingham’s Retirement and Relief System Pension Board on April 9 unanimously voted to increase the pensions for retired employees or surviving family members by $400 a month for one year. However, the board’s vote is not binding, and the council would have to approve the proposal before it could go into effect.

Mayor Randall Woodfin said the pension fund, which has been underfunded for more than 20 years, does not have that kind of money.

“If the pension had a surplus, I wouldn’t be standing before you having this conversation, because if the pension has some additional funds and the pension board decides to make that recommendation, those funds can be disbursed based on that surplus, but there is no surplus,” Woodfin said.

In 2018, officials told the public that the city had been underfunding its employee pension plan since 2003, giving it a liability of $750 million. Over the past 10 fiscal years, the city’s contribution to the pension fund has ranged from a low of $14 million in the 2015 fiscal year to $41 million in 2022.

In an April 15 letter to pensioners, the mayor said the $400 proposal was not one of the seven cost-of-living scenarios the fund’s actuary provided the board.

Woodfin told the council Tuesday that the $400 increase came about as the board discussed statutory minimum benefits, which are $400 for former employees and $320 for their spouses. The mayor said some have mistakenly assumed that a significant number of retirees are receiving that lowest benefit.

Woodfin said the city has 3,700 people receiving benefits, and only 24 receive $320 and 33 receive $400 monthly. Many people receive that statutory minimum because they worked with the city for a short time. It wasn’t until 2017 that officials required employees to work for the city for 10 years before being eligible for a pension, he said.

The average retiree receives $2,200 each month, the mayor said.

“The city actually has a very generous pension system that provides retirees with the benefit for life, something unheard of for most employers. The priority is to make sure we can fund the actual pension. We’ll continue to consider the needs of the retirees, along with our current employees, along with our residents, along our city’s infrastructure,” he said.

Council Approves Rib-It-Up Plans

In other business, the council approved an agreement to redevelop the former Rib-It-Up barbecue restaurant at 810 and 830 First Avenue North. The restaurant, a staple in Birmingham for more than 30 years, closed its doors permanently last year.

The developer, Archibald and Woodrow Enterprise, expects to invest $80,000 in the project. Officials expect the business to employ 20 people and generate about $1.5 million in revenue. According to the council’s agenda, the agreement will include a five-year revenue sharing incentive as well as a two-year hiring incentive. The total cost to the city will not exceed $185,000, according to city staff.

“We want to attract reputable small businesses, like Archibald’s,” Councilor Crystal Smitherman said. “Our focus is on supporting these enterprises, increasing revenue streams and ultimately building a stronger economy for our community.”

The council on Tuesday also approved a $49,992 proposal from James Paving Company of Birmingham to install speed cushions in various neighborhoods throughout the city.

The goal of this proposal is to reduce speeding, particularly in residential areas. In Collegeville, residents are advocating for speed cushions around locations such as the Collegeville Community Center, where children frequently go after school.

“When these streets are lined with parked cars, kids often dart between them. When you’re coming down the hill at high speed, you might not see children crossing the street,” said Councilor J.T. Moore.