VOL. 129 | NO. 246 | Thursday, December 18, 2014
City Council Approves Pension Changes
By Bill Dries
Memphis City Council members put to rest Tuesday, Dec. 16, at least the City Hall portion of the debate about city employee benefits and the liability of those benefits by approving changes to the city’s pension plan.
Memphis City Council members didn’t take word of a settlement in the long-running schools funding court case well this week. The settlement sidestepped the court mediation process the council has favored for several years.
(Daily News File/Andrew J. Breig)
The changes approved on third and final reading of the pension ordinance include in the new hybrid pension plan city employees with 7 1/2 years of service or fewer as well as city employees hired after July 1, 2016.
The 9-4 council vote on the proposal by council member Wanda Halbert follows a vote in June to change employee and retiree health insurance benefits as well.
Municipal union leaders favored an alternative by council member Myron Lowery that would have applied the new hybrid plan to new hires only and left all vested and unvested employees on the city’s current defined-benefits plan.
The council voted down the Lowery plan Tuesday.
Memphis Fire Fighters Association President Thomas Malone said earlier that if the council approved Halbert’s plan, the unions were certain to sue the city.
The hybrid plan is a combination of a market-based plan and a defined contributions plan similar to a 401(k). However, unlike private-sector employees with 401(k) plans, city employees do not participate in the Social Security program.
Halbert’s plan allows city employees with 7 1/2 years or fewer with the city as of the 2016 start date to freeze their own contributions and city contributions to the existing pension plan including multipliers and collect on it when they retire.
Nevertheless, Halbert, who had once been counted by the unions as a vote against including current unvested city employees, was the target of much of the criticism from city employees who packed the council chambers Tuesday.
“You brought a half-thought-out plan,” said Fran Triplett. “I don’t know who or what made you flip sides, but you could have done so with more respect.”
Halbert pointed to the large number of city employees who don’t live in the city and as a result don’t pay city property taxes that fund city government.
“This was an attempt to find a compromise where there was an equal share,” she said of the balance between city taxpayers and city employees. “Nobody wanted to compromise. … They just felt like we had to deal with it as a city.”
The employees and retirees have been a vocal and constant presence at City Hall through the summer, starting with the council’s first debates on health insurance changes.
Actuaries have told city leaders that the unfunded liabilities in the health insurance and pension plans are unsustainable.