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VOL. 129 | NO. 107 | Tuesday, June 3, 2014

Council to Discuss Retirement Plan Changes

By Bill Dries

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Memphis City Council members begin moving Tuesday, June 3, toward the first of three votes on a quartet of ordinances that would fundamentally change health care and pension benefits for city employees.

The ordinances are the first proposals designed to change the trajectory of the city’s finances in terms of retirement, pension and health insurance benefits and the future funding obligations they represent for the city.

The council meets at 3:30 p.m. at City Hall, 125 N. Main St.

Follow the meeting on Twitter at @tdnpols, www.twitter.com/tdnpols.

Memphis City Council members, including Reid Hedgepeth, left, and Myron Lowery begin discussing long-term city financial changes.

(Daily News File/Andrew J. Breig)

Up for discussion at a 10 a.m. budget committee meeting is a resolution that would take the city out of paying the 70 percent medical premium subsidy to city retirees eligible for Medicare. The ordinance would also eliminate the city’s medical premium subsidy for retirees younger than 65. It would continue the city subsidy for retirees older than 65 who have partial or no Medicare coverage.

Three ordinances on the committee agenda Tuesday for discussion would move all city government hires and current employees with less than 10 years of service to a defined contributions pension plan that is like a 401(k). It is a departure from the defined benefits plan vested city employees with 10 years or longer on the job will continue to have.

City government’s liability for the debt from that, which municipal governments must show on their financial books and pay toward, is unsustainable at current levels, according to financial consultants for Memphis Mayor A C Wharton Jr.’s administration.

None of the ordinances nor the resolution are on the council’s agenda for a vote at the regular afternoon council session Tuesday, and would instead be on the agenda for the first of three readings at the council’s June 17 meeting.

The June 17 meeting is when the council is scheduled to take final operating and capital budget votes for the fiscal year that begins July 1.

At a June 10 special meeting, council members will get their follow up report from Segal Consulting of Atlanta on the extent of the city’s unfunded pension liability and what the city’s annual required contribution toward the liability should be.

Segal’s numbers were significantly lower than the estimates of the administration. The difference is significant enough that it could affect whether the council approves a five-year ramp-up to the annual required contribution recommended by Wharton or a two-year ramp-up that some council members already favor.

Since Segal’s initial report, Wharton has said the administration’s actuary consultant, PricewaterhouseCoopers, and Segal have agreed on an unfunded pension liability estimate of $551 million – a middle ground between their respective initial estimates.

At the budget committee session Tuesday, council members will also make their proposals for amendments to the Wharton administration’s operating and capital budget proposals.

Up for a vote at the afternoon session is the second of three readings on council chairman Jim Strickland’s proposal to change the terms of the city’s Deferred Retirement Option Program – or DROP – that allows city employees to schedule their retirement years in advance and be paid on a pension as they continue to work for the city.

Also up for the second of three readings is Strickland’s proposal for a residential permit parking plan for the Overton Square area.

And the council votes Tuesday on two sets of appointments by Wharton.

The first slate includes three new appointments to the reactivated Civilian Law Enforcement Review board: attorneys Bruce Kramer, John Marek and Carissa Shaw.

The board has been inactive since before Wharton became mayor in 2009.

The other includes three appointments to the Memphis Area Transit Authority board: Shelia Williams of the Memphis Bus Riders Union; Kristen Bland, public policy and advocacy director at Methodist Le Bonheur Healthcare; and Martin Lipinski, director of the University of Memphis Intermodal Freight Transportation Institute.

The council also votes Tuesday on an agreement to turn over seven pieces of World War II-era artillery to the West Tennessee Military Vehicles Collectors Club of Collierville and the Shelby County Historical Commission for restoration and future public display. The artillery had been in Memphis Park, formerly known as Confederate Park, since Civil War-era cannons in the Downtown park were donated in the 1940s to a war scrap drive.

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