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VOL. 129 | NO. 196 | Wednesday, October 8, 2014

Council Delays Pension Action, Broods Over 'Key Members' Designation

By Bill Dries

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Memphis City Council members debated who is a “key member” of the body Tuesday, Oct. 7, as they delayed action on changes to city employee pensions into November.

The delay on third and final reading of several pension ordinances was expected. The items are now on the Oct. 21 council agenda. But council members expect there will not be a vote then either and city Chief Administrative Officer George Little said the administration can live with a further delay.

At the council session in two weeks, the council is expected to get a report from Segal Consulting of Atlanta, the actuary consulting firm the council hired earlier this year.

The pension changes include switching all city new hires and city employees with less than 10 years of service to a defined contributions plan similar to a 401-k instead of the current defined benefits plan.

The changes as a whole are the second part of major changes to the benefits of city employees and retirees including changes approved by the council in June to health insurance coverage.

The city’s unfunded liabilities for the health insurance and pension benefits are unsustainable and the changes are an effort to right the city’s financial condition on a long-term basis.

They also remain politically controversial.

Stoking the continuing controversy are the changes made by the council last month and other changes made by Memphis Mayor A C Wharton over the weekend.

The council approved last month an amendment that allows a group of approximately 300 retirees to remain on the city’s health insurance with the city’s continuing to subsidize 70 percent of their premiums.

Wharton announced Friday that he was cancelling the spousal carve out that took the wives of city employees and retirees off the city’s plan when those spouses have other jobs. He also said the $7 million expense will be paid for through other changes including preauthorization for various medical procedures as well as changes to the prescription drug coverage formulary and wellness practices and awareness.

In the written press release issued Friday afternoon, Wharton said he didn’t seek a council vote on the changes and that the changes were instead “a move endorsed by key members of the Memphis City Council.”

That angered those council members who weren’t contacted by Wharton or his administration before the change was announced Friday.

“I was never contacted. I talked to a number of council members who were not contacted about this reversal,” council member Janis Fullilove said. “I was really kind of embarrassed and livid that here it is -- we are playing with these employees lives.”

Council member Wanda Halbert called it a “lack of political and professional respect.”

For council member Lee Harris, the changes after the June council vote were the issue.

“Is the mayor firm this time?” Harris asked Chief Administrative Officer George Little. “Is the mayor certain or is he going to go back on other things and change his mind unexpectedly?”

Little said the numbers and terms are firm and will not change again.

“Who knows?” Fullilove replied after Little responded.

In other council action Tuesday, the council approved on third and final reading an ordinance that returns the local building code to old standards before the council and Shelby County Commission approved more stringent seismic measures. The new standards apply only to residential structures and require seismic shear panels that homebuilders complain raise the cost of new home construction $5,000 to $10,000 per home. They also contend the panels aren’t necessary in a seismic zone like Memphis.

Structural engineers favored the more stringent standards citing the dangers of the New Madrid Fault zone.

The council approved on the first of three readings the tentative rewriting of the seismic code to do away with the panel requirement and council members are working with Shelby County Commissioners who are also considering the same changes.

Meanwhile, the council approved a residential-work office in Cordova on the northwest corner of Macon Road and Dexter Lane. The home on the 4.2 acre lot will be the office.

And an office proposal at Central Avenue and New York Street was withdrawn from consideration by the developer.

The council also sent a resolution to the Land Use Control Board seeking recommendations on a single standard and process for the approval of all day care centers in residential neighborhoods.

Harris wants the process to include day cares in homes in addition to day cares in commercial property.

PROPERTY SALES 41 308 2,265
MORTGAGES 47 379 2,607
BUILDING PERMITS 128 1,018 6,068
BANKRUPTCIES 53 255 1,787