Mayor, other leaders brace for conflict over police-fire pension

[NotNow]

2009 COJ budget brief:

http://www.coj.net/NR/rdonlyres/eelybf6h5nu5pucyrwp7jluflmrp4kvrfpz7stzathgbsedynben7jusm2ejauhsfiwk46zolxa7jtq2o7wqrrruq3h/1+budget+in+brief+2009.pdf

[Deuce]

Sounds like NotNow is JSO. Thanks for providing a fuller picture. As an employee of JEA it irritates me when people start slamming JEA for rate increases or making broad statements without having all the facts or knowing the bigger picture.

[stjr]

Mr. Mayor and City Council, here is an outline of how New York State is handling their pension issues.  Note the move toward the 401K model.  We are not alone and it must be dealt with.  The alternative is the bankruptcy of government. 

New York Times
June 6, 2009
Paterson and Unions Agree on Limits for New Pensions
By DANNY HAKIM

ALBANY â€" Gov. David A. Paterson and the state’s public employee unions announced an agreement on Friday that would reduce pension benefits for future public employees and save the state billions of dollars in an attempt to control ballooning costs for retirees.

To win their support for the deal, the governor provided the unions with significant incentives and backed off earlier demands for concessions from current employees.

Mr. Paterson will shelve his plan to lay off 8,700 workers and will drop a proposal to require existing workers to give up their 3 percent annual pay raise this year and to defer a week’s pay. In addition, 4,500 workers will be offered $20,000 buyouts.

Paterson administration officials said the agreement would save the state $30 billion over 30 years, but much of the savings will not be realized for another decade.

“This agreement is a huge win for New York’s taxpayers and will lead to the most significant reform of our public pension system in decades,” the governor said in a statement. “This is real reform to the pension system, which will substantially reduce costs to the taxpayers of New York State.”

The agreement will raise the retirement age for future employees from 55 to 62, and require them to contribute 3 percent of their salaries to their pensions for their entire careers, instead of for their first decade of service, which is the current requirement.

New workers will not become vested in the pension plan until they reach 10 years of service, rather than the current five. The deal will also limit the amount of overtime that employees can use in their last years of work to increase their pension benefits.

The agreement requires legislative approval, though endorsements by the governor and the labor unions virtually assure its success.

The deal covers state workers and local governments outside New York City; the Paterson administration hopes to negotiate a similar agreement for New York City employees, but city unions are adamantly opposed to doing so. New York City has its own retirement system. The deal also does not affect police officers, correction officers, teachers and firefighters.

The urgency of the need for changes in retirement benefits was underscored last week when the state comptroller’s office reported that the pension fund, hobbled by losses amid the market’s collapse, had shrunk to $109.9 billion at the end of March from $153.9 billion a year earlier.

The deal comes days after Mr. Paterson shocked and angered police and fire union leaders by refusing to allow new officers and firefighters across the state to continue to enroll in enviable pension benefits that were phased out in the 1970s for other public employees. The governor vetoed routine legislation that would have extended the benefits â€" similar bills have been signed by a series of governors going back to 1981.

While his veto was praised by budget watchdogs as a sign of rare resolve from the governor, his latest labor deal received mixed reviews.

Though the administration is hoping that the buyouts and an offer to allow employees to choose a reduced workweek will still generate immediate savings, the cash-poor state will be providing raises to the 129,000 employees covered under the deal announced Friday. Those raises will cost $180 million, at a time when some other states are freezing salaries and furloughing workers. There is also a cost of up to $90 million for the buyouts.

Further, New York has a history of reversing its pension cutbacks. The state has previously required that employees contribute to their retirement beyond 10 years of service, only to roll back the requirement in an election year. Union leaders, who had criticized the governor during months of negotiations, succeeded in their insistence that existing labor contracts not be reopened.

“The governor moved significantly from his original demands for major contract concessions from the state’s work force,” said Kenneth Brynien, president of the Public Employees Federation. “Considering the deteriorating condition of the state’s finances, this represents a reasonable accommodation.”

Danny Donohue, the president of the Civil Service Employees Association, said his union “recognizes these are extraordinary times with unprecedented challenges, and we have tried to find ways to help without reopening contracts.”

The agreement creates the first new pension category for state employees since 1983 â€" it is called Tier V because it is one of five such classifications, and provides the least generous benefits.

But it is not likely to encompass the city. A key labor leader in New York City called it a nonstarter, given that only this week city unions concluded negotiations that led them to amend health benefits for more than 550,000 current and retired employees, guaranteeing $400 million in savings over two years.

“The city unions just completed long, tough negotiations with Mayor Bloomberg,” said Harry Nespoli, the head of the Municipal Labor Committee. “As far as Tier V is concerned, it’s not negotiable,” he said, adding, “We’ve done our share.”

Financial analysts had varying views on the agreement.

“Obviously the benefits to the state, or its taxpayers, are not immediate,” said Jeremy Gold, a New York actuary and economist who has contended that governments often understate the ultimate costs of pension benefits. But he added that restraining the benefits of future hires “may be the beginning of the way out.”

Edmund J. McMahon, director of the Empire Center for New York State Policy, a conservative-leaning research group, said the governor had not gone nearly far enough. Referring to the 4,500 buyouts, he said the deal “allows you to pay more money to union members who are already ready to retire.”

Mr. McMahon said he believed New York and other states needed to follow the shift embraced by the private sector away from the traditional defined-benefit pension plan to a 401(k)-style retirement program to prepare for a potentially calamitous future increase in pension costs.

Speaking of the governor’s deal, Mr. McMahon said, “If you contrast this to what is happening in other major states, where you have union agreements of givebacks or furloughs, it’s remarkable.”

Elizabeth Lynam, the deputy research director of the Citizens Budget Commission, a nonprofit policy group, called the move “a really good start.”

“It’s going to be tough to find the money to do the buyouts, but the pension tier is significant,” she said. “If you think about the $45 billion the pension fund lost this year, a new pension tier is desperately needed.”

From: http://www.nytimes.com/2009/06/06/nyregion/06pension.html?_r=1&hp=&pagewanted=print

[NotNow]

stjr,  the Jacksonville Police & Fire Pension is not in the same league as the the NY pensions.  Also, see the paragraph:

"The deal covers state workers and local governments outside New York City; the Paterson administration hopes to negotiate a similar agreement for New York City employees, but city unions are adamantly opposed to doing so. New York City has its own retirement system. The deal also does not affect police officers, correction officers, teachers and firefighters."


Let me give you some more information:

-Officers pay 7% of salary towards the pension throughout their career.
-Officers are NOT eligible for social security, and the city does not pay s.s. tax on them.
-Officers do NOT recieve city subsidized medical coverage after retirement.
-If Jax were to go to a 401K system, it would lose millions in outside funding from the state and federal governments. 
-If the city had paid into the system in the 1990's as scheduled, about $125 million more dollars would have been generated resulting in a healthier system.

Again, look into some other Sheriff's Offices retirement systems.  Google the FRS, or Florida State Retirement, which most Florida S.O.'s use.  There is no employee contribution.  While there is definitely a problem here, it is mostly due to the city not funding the pension for several years.   Now, with a down market, it is time to pay the piper and the city is complaining about "unsustainable plans". 

[BridgeTroll]

I was totally unaware of...

-Officers pay 7% of salary towards the pension throughout their career.
-Officers are NOT eligible for social security, and the city does not pay s.s. tax on them.
-Officers do NOT recieve city subsidized medical coverage after retirement.

This really changes things in my mind.  If they are not paying into SSI and not eligible foe a "pension style" health care upon retirement then my stance toward this fund may have to change...

It may be difficult to find but can you provide some kind of proof to back these statements up?

[Deuce]

In regards to the NY article:

concessions from current employees

Again, let me say as along as nothing changes for those already in the pension plan, I don't have issue with modifying benefits for future plan participants.

raise the retirement age for future employees from 55 to 62

This seems reasonable to me when everyone else has to work till 65 and above.

contribute 3 percent of their salaries to their pensions for their entire careers, instead of for their first decade of service, which is the current requirement

Totally. For just 10 years is horrendous. If they are paying into SS in addition that would be painful, but to get to have both is unbelievably cushy. If they are not, then that's a reedonkulous contribution.

traditional defined-benefit pension plan to a 401(k)-style retirement

I have no problem moving towards this again as along as current employees have the choice to remain in the defined-benefit.

As far as JEA goes, they pay 8% of their salary throughout their entire career and do not pay into SS and loose eligibility (unless they already had a lengthy private sector career before joining JEA).

[NotNow]

BT,  here is a link to the Summary Plan which is what a pension fund member receives upon enrollment:

http://www.coj.net/NR/rdonlyres/eagbwedbelq2fhq5og4rlerrdlsi5pmkqrw6cpljvwasb55suc2wcb24zyaylcocohklo6tmyod34ijpnsuyqkk6lmg/PFPF+Summary+Plan+Booklet+2008+-+2010.pdf


These are the facts of the Police and Fire Pension Fund.  Keep in mind, as Deuce pointed out, we won't receive social security (even with a private sector career, it would be reduced because of the "windfall elimination provision").   Most retired Police Officers are having to pay about $750 per month for medical insurance per couple.  Again, on roughly $40,000 for retirement.  That is why almost all Officers have to work after retirement. 

The twenty year eligibility is another issue.  But there is a reason that the military and almost all law enforcement agencies try to keep their workforce younger.

[civil42806]

Well of course you dont get Social Security, you don't pay into it.  Much like the old CSRS fed retirement plan, don't think that was a secret before anyone hired on

BT,  here is a link to the Summary Plan which is what a pension fund member receives upon enrollment:

http://www.coj.net/NR/rdonlyres/eagbwedbelq2fhq5og4rlerrdlsi5pmkqrw6cpljvwasb55suc2wcb24zyaylcocohklo6tmyod34ijpnsuyqkk6lmg/PFPF+Summary+Plan+Booklet+2008+-+2010.pdf


These are the facts of the Police and Fire Pension Fund.  Keep in mind, as Deuce pointed out, we won't receive social security (even with a private sector career, it would be reduced because of the "windfall elimination provision").   Most retired Police Officers are having to pay about $750 per month for medical insurance per couple.  Again, on roughly $40,000 for retirement.  That is why almost all Officers have to work after retirement. 

The twenty year eligibility is another issue.  But there is a reason that the military and almost all law enforcement agencies try to keep their workforce younger.

[NotNow]

Civil, I am not making a case for collecting SS.  I am pointing out a fact that I don't believe most Jax citizens are aware of, which is that Jax Police & Fire pensioners can not count on SS as additional retirement funding.  I also do not think that most citizens know that we contribute 7% of salary to the pension.  Or that there is no pension or city funded medical insurance.

Do you remember a couple of years ago when the city council voted themselves and ALL previous council members into the state retirement system?  How much did that cost?  How much do they contribute?   The state system is a defined benefit system and NOT a 401k.  How many of the city employees calling for Police & Fire to go to a 401k are on a defined benefit retirement? 

[BridgeTroll]

Please stay on topic folks...

Why was it determined way back whenever to NOT pay into the Social Security system.  I will assume it was because a better pension could be negotiated by the union.

[NotNow]

Quite a few occupations were left out of the original SS Act.  One of those was State, County, and municiple workers.   The original act was not designed for "everyone".  Over the years, the tax rate, benefits, and occupations included has grown due to whatever political forces guided them.  Today, many State and local government employees (hence JEA, JFRD, & JSO) are not included in the SS system.  All of this was well before the existance of any of the represented unions.  I am not an expert on taxes, and I am not sure if the law as written today would allow any contribution by the current pensions.

[NotNow]

Also Civil,  most Police Officers are in the job because they love the work.  The truth of the matter is that these employees are college educated, drug free, good credit, psychologically stable employees who in many cases have left higher paying jobs to be Officers.  They take what is thought of (at least by most) a small salary.  We are all VERY aware of our insurance benefits and pension because it is all that we can leave our families.  As you say, we take the job knowing all of this.  We are not seeking to change the pension, the city is. 

[BridgeTroll]

We are not seeking to change the pension, the city is.   

The city has to because of the huge portion of the cities budget that pension fund represents.  When are police and firemen eligible to collect the pension?  Is it graduated?

My thoughts on the pension have changed greatly since the beginning of this thread.  Since these guys are not eligible for social security the pension is is more of a necessity than a benefit.  Additionally most people are not eligible for social security until 62(?)... how many police officers and firemen are still on the force at that age?

[NotNow]

My statement "We are not seeking to change the pension, the city is." was in response to the post that pointed out that no SS benefit was known to Police before taking the job, so we shouldn't gripe now.  I agree with that poster.  I am just pointing out that we accepted the current pension system as did the city.  Pension cost are high now in a large degree because the city did not make contributions when the stock market was earning large returns.  It is like not making any contribution to your IRA because of the paper stock earnings and then being "surprised" when the stock price goes down and then you must contribute twice as much as before to be at the funding level that you  need to be at. 

I believe that the majority of Policemen retire in their fifties.  Many, but not most, will go into their sixties.  But this is a physically demanding job, and many just can't do it in their later years.  Of course, some detective work and administrators can go longer.  I would bet that firefighters are quite similar.  Most Officers try to take on a retirement job to offset the cost of medical insurance and to make up their former salary.  Retirement eligibility is at twenty years at 60% of a pay formula that figures in your last few years.  Overtime and other "temporary" pays don't count toward retirement.  You can earn an extra 2% per year for ten years (30).  It is roughly the same as a military retirement, but without the medical and other benefits.  I hope that answers your questions.

[stjr]

I compared these CITY/EMPLOYER-only contribution pensions below to what I expect to get from my 401K based on only my employer's contributions (which equal or exceed the national 401K average) and as if I maintained it all in conservative investments that lose no principal.  If I made around the sheriff's salary of say 150K, I would get no more than 5 to 10% of the relative pensions below.  Add to this, that my returns are NOT GUARANTEED and I would never hope to average 8+% assured to the police and fire fighters year after year!

So, based on my personal experience, these are VERY (ten to twenty times more so) GENEROUS pensions relative to what the average 401K FULLY participating private sector employee can expect to take home under ideal circumstances.  This is what gives me reason to think this benefit has plenty of room for adjustment and would still remain more than competitive!

Put another way, at 5% investment income, the City would likely need around $1.2+ million to support a $100K pension.  At today's meager 2% or less returns, the City would likely need $2+ million!  Exact amounts would depend on life expectancy at retirement but I am guessing around 25 to 30 years.  How many of our employers are chipping in that kind of money and guaranteeing us 8+% returns to assure us of a similar retirement?

Top 50 Pensions Of Jacksonville's Retired Officers, Firefighters

POSTED: Friday, July 10, 2009
UPDATED: 5:51 pm EDT July 10, 2009
The average annual pension paid to 1,912 retired public safety personnel is $41,791, but some receive considerably more.

Channel 4's Jim Piggott obtained from the city of Jacksonville the 50 retired police and firefighters who receive the highest pensions.

      Name   Years of Service       Annual Pension
      Richard A. Barrett   34   $118,570
      John H. Rutherford   28   $108,593
      James E. McMillan   29   $108,496
      Charles D. Clark   35   $107,785
      Raymond A. Miley   32   $107,751
      Joseph N. Henry   35   $102,106
      Alvie L. Powell   35   $102,089
      James D. Ley   34   $100,409
      Justin D. Hill   33   $98,566
      William H. Johnson   32   $94,085
      Jerome Spates   37   $93,628
      James H. Lindsey   33   $93,556
      Nathaniel Glover Jr.   28   $89,650
      Steven R. Weintraub   33   $89,623
      Philip N. Rudin   39   $87,902
      John I. Owens   35   $87,651
      Wyllie B. Hodges   35   $87,645
      William H. Burns   34   $87,588
      Emory M. Holsenbeck   39   $86,919
      Christy L. Gordon   35   $86,321
      Miles R. Bowers   57   $85,992
      A. L. Kelly   35   $85,915
      David W. Sembach   35   $85,802
      James W. Black   32   $85,458
      Howard M. Nelson   38   $84,984
      Peter R. Mittleman   35   $84,777
      Clinton W. Clifton   35   $84,754
      Robert E. Huntley   32   $84,531
      Romulous E. Alderman Jr.   52   $84,175
      Charles R. Sealey   37   $83,991
      James F. Tuten   36   $83,830
      Johnny P. Hires   33   $83,303
      Richard E. Hunt, Jr.   33   $83,265
      William L. Mays   34   $83,250
      Harold H. Hollander   35   $83,238
      Richard K. Parker   26   $83,210
      Johnny M. Sirmans   35   $83,150
      Wendell Black   39   $83,058
      David F. Fullwood   36   $82,777
      David G. Gueterman   27   $82,669
      Arthur J. Lindsey   30   $82,096
      Mark T. Stevens   27   $81,727
      Julian R. Smith   32   $80,982
      Wayne L. Doolittle   32   $80,936
      Mark S. Richardson   35   $79,884
      William K. David, Jr.   33   $79,588
      Lawrence F. Osborne   35   $79,576
      Phillip D. Eddins   33   $79,470
      Charles S. O'Neal   33   $79,444

The 50 individuals listed above have an average of 35 years of service and represent the top 2.6 percent of a pensioner population of 1,912 as of June 30, 2009.

From: http://www.news4jax.com/news/20019359/detail.html

Who's At Top Of City Pension Plan List?
Mayor Peyton Must Find Over $108M To Fund Plan

POSTED: Friday, July 10, 2009
UPDATED: 6:27 pm EDT July 10, 2009
Pension Budget $108 Million
JACKSONVILLE, Fla. -- In the upcoming city budget, Mayor John Peyton has to find more than $108 million just to fund the city pension plan for one year.

The biggest part of that deals with police and fire pensions.

Even just mentioning the possibility of messing with those pensions has caused quite an uproar.

Channel 4's Jim Piggott did some checking to see just how much money some retired police and firefighters are making.

In fact, he looked at the top five on the list, which looks as follows:

No. 1 is former Fire Chief Richard Barrett. His yearly pension check is over six figures at more than $118,000.

You might be surprised at the No. 2 person in line.

It's Sheriff John Rutherford. Rutherford retired from the JSO before running for sheriff, an elected position.

Each year he gets more than $108,000 from the pension fund. And that's just his city pension. As sheriff, he is also currently being paid, on top of his pension, $157,000 a year in salary.

And he'll get another pension check from the state based on his years as Sheriff. Channel 4 sat down with the sheriff and asked him about this.

"I worked very hard for that money, and I deserve that retirement," sheriff John Rutherford said. "Running for sheriff was not about money. It was about serving this community, and at great expenses to my family, I might add. I walked away from the drop plan."

On the heals of Rutherford is former Sheriff Jim McMillan. For his 29 years of service, he too takes home a six-figure salary at $108,000 a year.

He's followed by former Fire Chief Charles Clark at $107,000, and at No. 5 is Ray Miley, who worked 32 years with the sheriff's department. His yearly pension is also $107,000.

Further down the list is former Sheriff Nat Glover. He takes home more than $89,000 a year from a city pension. But he is doing something different and is donating that money to charity.

Peyton said the city needs pension reform. He wants to make major changes to pension plans for new employees.

"That is why I'm optimistic this plan will be adopted because it does not impact current employees," Peyton said. "It's only new hires and saves close to a billion three in the next thirty years."[/b]

From: http://www.news4jax.com/news/20018361/detail.html