VOL. 129 | NO. 236 | Thursday, December 4, 2014
Pension ‘Concept’ Flips Council Script
By Bill Dries
For most of her seven years on the Memphis City Council, Wanda Halbert has been the most outspoken member when it comes to last-minute items added to the council’s agenda for a vote.
So, when Halbert rolled out a compromise plan on the city’s pension changes Tuesday, Dec. 2, she took some heat from other council members.
But her plan that would include some portion but not all of the city’s unvested city employees in the switch to a hybrid pension plan got eight votes after the irony fest that can be the council’s nature at times. A city employee is vested in the pension plan with 10 or more years of service.
“We only got this today,” said council member Harold Collins, an opponent of what the council took to calling a “concept.” “I’m not prepared to vote on this.”
Collins’ words are strikingly similar to what Halbert has said a number of times.
“For any council member to sit in this room and say, ‘We just got this piece of paper tonight’ – how many times have you sat in a meeting for seven years and got a piece of paper in your hand and pressed a yes or no button?” Halbert said to Collins. “When some of us sit up here and we tell the citizens, ‘This is my first time seeing this’ – you make a mockery out of us. You do it on a regular basis. But you still vote it up or down. We did it on the $25 million for AutoZone Park.”
Halbert insisted she telegraphed her broad intent a week ago when she asked at a committee session designed to wrap up the pension wrangling what sacrifices city employees were prepared to make.
It got the attention and drew the immediate ire of municipal union leaders last week.
Halbert followed that with a one-on-one meeting with actuaries from Segal Consulting, the Atlanta firm the council hired to advise it on the various pension changes proposed. Halbert did not meet with Memphis Mayor A C Wharton Jr. in advance of Tuesday’s rollout, although she said she has been talking about the pension issue in general with the administration for over a year.
Halbert proposed city employees on the job 7 1/2 years and less would be switched to the hybrid plan that is a market-based retirement account and a defined contributions plan. Their contributions and the city’s contributions under the current defined benefits plan would be frozen and could be tapped into after retirement, under Halbert’s proposal.
She referred to it as being “two pots of money” for those retirees.
The council approved Halbert’s concept as an amendment Tuesday but delayed a final vote on the main motion as amended until the Dec. 16 council session. That’s when a detailed draft of the ordinance is expected to be ready for council consideration and probably further debate.
Halbert’s amendment effectively killed council member Myron Lowery’s pension alternative that would have put all newly hired city employees in the hybrid pension plan starting in 2016 but no current city employees whether they are vested or not.
Lowery’s plan had political momentum last month when the council approved it on the second of three readings but voted down Wharton’s plan to put new hires and all unvested city employees with less than 10 years of service in the hybrid plan.
The administration is standing by its proposal, estimating it comes with $10 million in savings in the first year toward the city’s annual required contribution. Halbert estimates her proposal has $6.8 million in savings in the first year.
Lowery tried and failed to graft his new-hires-only alternative onto a modified proposal by the administration that is still standing, but he failed Tuesday.
He could try again later this month depending on the reviews council members give Halbert’s plan once it is in writing with more detail and more complexity.
Some council members want to put the second part of the city’s long-running and contentious debate about city benefits to rest by the end of the year before the 2015 election year. The last council meeting of 2014 is in two weeks.
“This is still government using employees,” council member Joe Brown said. “There’s still too much bait-and-switching up here.”
Since the spring, the council’s agenda has been dominated by fixes for health insurance and pension liabilities that actuaries have told the council are unsustainable at current funding levels. The council approved health insurance changes in June with several amendments coming later. The two issues have also highlighted the council’s existing rift with Wharton across several issues.
Municipal union leaders favored Lowery’s alternative. Memphis Fire Fighters Association president Thomas Malone said he was “shocked and appalled” by Halbert’s plan.
“We will see you in court if you do this,” Malone told the council.