June 16--As the expiration date approaches for contracts
with three of the city's largest labor unions, the Jim Kenney administration is
gearing up for a fight over pensions.
City officials want the police, firefighters, and
white-collar municipal workers unions to agree to pension plan changes that
AFSCME District Council 33, which represents 9,000 of the city's blue-collar
workers, accepted last year. Contracts for the three other unions expire June
30.
D.C. 33 signed a four-year contract July 15 worth $170
million that included an 11.5 percent wage increase over the life of the pact.
In exchange, the union agreed to increased pension contributions from its
highest-paid current employees and a hybrid pension plan for new ones.
But presidents of the police, firefighters, and
white-collar workers unions expressed skepticism this week over the proposed
plan that would cap annual pension payments at $50,000 for future employees,
while anything above that would come from contributions to a 401(k) plan.
"We're not open to any pension reform," John
McNesby, president of the Philadelphia Fraternal Order of Police, said
Wednesday. "We already pay the most into the pension. We don't get three
highest years. We don't receive Social Security."
Ed Marks, president of Philadelphia Firefighters' and
Paramedics' Union Local 22, predicted that pensions were "going to be the
biggest stumbling block" in the negotiations.
Meanwhile, AFSCME District Council 47 president Fred
Wright said he was open to negotiating with the city on the pension front, but
he wants the city to increase the defined-benefits cap for his members.
"We see some issues with the baseline being too
low," Wright said, referencing the $50,000 cap for future employees.
"Our members make much more than that."
Finance Director Rob Dubow said the city wanted all
municipal union members, elected officials, and exempt employees to agree to
the same pension plan as D.C. 33, which mandates that anyone paid an annual
salary of more than $45,000 pay between 0.5 percent and 3 percent more toward
one's pension, depending on the salary bracket. For example, those earning
$55,000 to $75,000 contribute 1.5 percent and those earning $100,000 or more
pay 3 percent more than their current contributions, which vary among the
unions. (The average salary of a D.C. 33 employee is $38,000, so most current
employees wouldn't be affected by the changes.)
Additionally, the city wants all new employees, unionized
and not, to participate in the new hybrid plan that would allow for a
traditional defined contribution benefit of up to $50,000 annually. Above that,
they could enroll in a 401(k) plan. The city would match half of the employee's
contribution up to 1.5 percent of annual compensation.
According to the city, if everyone agrees to the same
changes, if the city continues to make its minimum pension payment plus pump
sales tax revenue into the pension plan, and if the investment gods shine down
on the fund with constant assumed rates of return, then in 13 years the fund
would be more than 80 percent funded. Currently, the fund has only 45 percent
of the money it needs to satisfy its $11 billion liability.
The administration tried to get City Council to pass
legislation that would impose the D.C. 33 changes on the city's elected
officials and nonunion workers, in part to convince the three unions now in
negotiations that everyone is on board with the plan. Council balked at the
idea.
"The plan is 45 percent funded. We just need to take
action as quickly as possible," Dubow said.
On Thursday, Council President Darrell L. Clarke declined
to discuss the administration's pension bill and its potential effect on
current labor negotiations.
"Should I answer that, Jane?" Clarke asked,
looking at his spokeswoman, Jane Roh, who said he should not answer. "I'm
not feeding into that," he said.
Clarke has previously said that he wants to wait until
all other union contracts are signed before legislating pension changes for
nonrepresented workers and elected officials.
Council on Thursday approved a $4.4 billion budget for
the 2018 fiscal year, and a five-year plan, which has $200 million reserved for
labor contracts.
It will be up to a panel of arbitrators to decide how
much money the city will have to pay for the new police and firefighters
contracts. Each side will make its argument and have rebuttals, and then the
arbitration panel will decide.
McNesby said he would push for higher pay for his
members.
"We just want to be paid fairly," he said.
"We've been making the city look good in the last few years with the DNC,
the papal visit, the NFL draft. You don't see the stuff that is going on around
the country here. We should be paid accordingly."
For the firefighters, Marks said investment into the
union's health-care plan, pensions, and wages were the three major items he
would be advocating for during arbitration, currently scheduled through late
July. Like police, firefighters also don't receive Social Security, making
their pensions their only government-funded retirement income.
D.C. 47 is negotiating directly with the city. Wright
said his negotiating team met with the city for the first time at the start of
this month and has future meetings scheduled. He said he doesn't expect a new
contract to be reached before the current one expires.
Aside from pensions, the city declined to discuss its
negotiations with the unions.
Source: FireFighter.com
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