Gray train is out of track

Posted 1/19/17

The administration and the City Council took a step in 2011 to contain the escalating costs of municipal pensions, passing an ordinance that significantly altered the benefits of employees hired after July 1, 2012. One change requires firefighters hired

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Gray train is out of track

Posted

The administration and the City Council took a step in 2011 to contain the escalating costs of municipal pensions, passing an ordinance that significantly altered the benefits of employees hired after July 1, 2012. One change requires firefighters hired after July 1, 2012 to be 50 years old and to have had 25 years of service before they can start collecting a pension, whereas those who were members prior to the date could retire after 20 years of service regardless of age. Such a benefit, as well as one that gave firefighter retirees an automatic 3 percent per year annual adjustment, are major contributors to the city’s operating expenses. In fact, annual pension costs exceed operating costs for the department.

Unlike the state and other municipalities that amended existing pension benefits in an effort to make them sustainable, the new law only made adjustments to the plans of future employees. Yet, it was a beginning, although it created two classes of employees: those on the old, or Tier I, plan and those on Tier II.

It will be decades before municipal employees covered by Tier II start retiring and the reduced benefits of the plan kick in.

Nonetheless, Local 2748 of the International Association of Fire Fighters has challenged the law on grounds that pension benefits must be negotiated and cannot be implemented legislatively. This is hardly a new position. In 2011 the union made the same argument, with the city countering that it had the right since Tier II applied to future employees.

The Tier II package was named in subsequent contracts with police and municipal employees, but for some reason left out of firefighter agreements. The argument made by the city is that it is law and the law applies.

Now those future employees are here. Naturally, it will be years before they start retiring and collecting benefits. For the moment they are paying into a plan – Tier II – that is calculated to pay those benefits.

But the union wants to bring back the better benefits of a plan taxpayers are already straining to afford for the 45 men and women who have joined the force since July 1, 2012, not to mention the additional 24 who joined the force in October.

The union has brought a grievance and is looking to arbitrate the issue. The city has challenged the action on grounds that the grievance procedure was not properly followed and that the law applies. The matter is before Justice Jeffrey Lanphear in Superior Court.

We don’t see the city retreating on this. This is a skirmish in a much larger battle the administration must wage over retiree benefits and the automatic 3 percent cost of living adjustment of some plans to bring municipal expenses in line.

The options aren’t pretty. Continuing what we’re doing even with Tier II in place shifts resources needed to pay for ongoing municipal services to rich pension plans at the expense of the taxpayer. At some point, bankruptcy will become the only option and then those who were promised pensions have nothing. This is a gravy train that is running out of track.

Comments

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  • davebarry109

    The city has to stop giving new hires a 3% compounding COLA upon retirement. This is unsustainable. They cannot just stop it flat, since the number of police and fire that would retire would devastate the community. They have to start with new hires. Right now, police and fire can retire and double their pensions in 20 years. If they retire in their 50's, when they live to 80, they will be taking over six figures a year. Multiply that by hundreds of retirees and you have a problem Houston.

    Friday, January 20, 2017 Report this

  • Reality

    This editorial is spot on. Scottie has known about the impeding collapse of Warwick's pension system for years but he has done nothing. The 3% cola should have been eliminated years ago but Scottie done nothing but appease the special interest groups. Let's not forget he has been aided and abetted by Travis and the clueless Vella=Wilkinson. These two have heard all the testimony at council hearings about the imminent financial disaster but to curry favor with the unions turned a blind eye.

    The Beacon didn't mention the unfunded healthcare $300 million obligations these disgraceful politicians have burdened the hardworking taxpayers with.

    It's time to flush the system.

    Friday, January 20, 2017 Report this

  • Thecaptain

    Once again I am compelled to state other facts that effect this issue. The mayor takes the steps to eliminate the COLA in the effort to save $9 million dollars between 2012 and 2049. In the same token, in July of 2015 he increases the unused sick pay bonus by 50%. Unchallenged and not discussed by the council, that perk without pay increases, step raises, longevity, or promotions, and based only on the salary rate as of 1/1/16, will cost the taxpayers $34.5 million from now until 2049. For those that can add, that is a net loss of 25.4 million. So one hand taketh away, and the other hand giveth back 10 fold. Is anyone awake yet??

    Tuesday, January 24, 2017 Report this