City's law enforcement unions agree to pension concessions
Published: Tuesday, June 11, 2013 at 3:35 p.m.
Last Modified: Tuesday, June 11, 2013 at 3:35 p.m.
Gainesville’s two police unions have agreed to pension concessions, a step forward for city administration’s efforts to stem escalating retirement costs.
The changes approved by the Fraternal Order of Police and Police Benevolent Association are projected to save some $2 million over the next five years.
Once the City Commission gives final approval, a first vote passed unanimously last Thursday, 92 percent of the city’s employees will have taken some cut to retirement benefits, Risk Management Director Steve Varvel said.
Over a five-year period, that’s expected to cut the city’s required contribution to employee pension plans from $92 million to $80 million, Varvel said.
The city administration has pushed for pension changes after a span of years when the recession’s impact on investment markets, a growing number of retirees and an increase in the length of retirements combined to make retirement contributions a larger financial obligation for the city.
The city’s contribution rose from approximately $4 million in fiscal year 2005-06 to a projected $12.9 million in fiscal year 2012. City administration projected annual costs would rise to more than $21 million in a few years if agreements were not reached on some benefit reductions.
FOP President Jeff McAdams, a Gainesville police officer, said the membership was less than enthusiastic about the changes. He said the union wanted to cooperate in the effort to control spending and ensure the sustainability of the plan but also had concerns about the impact to current and future employees.
McAdams and Lt. Will Halvosa, the PBA representative at the city, both voiced concerns that the benefit reductions could have negative effects on the department’s ability to attract and retain good officers in the future.
“Obviously, it’s not really what we wanted, but it’s something we can live with right now,” Halvosa said. “We certainly feel like we’ve made some concessions here.”
While current employees will feel the effects, the most significant changes will be for future employees hired after July 1.
New officers would have to work 25 years — up from the current 20 — to be eligible for normal retirement benefits. Their annual benefit would be determined as a percentage of their salary based on their 48 consecutive months of highest pay. That’s up from the current 36 months.
Among other changes, the new hires and current employees who are not yet retirement-eligible also would have to work longer to get cost-of-living increases to their annual benefit.
Currently, employees with 20 years of service receive a 2 percent annual cost-of-living increase to their benefits at age 62, while employees with 25 years of service receive that at age 55.
Current employees with less than 20 years of service and future employees will now have to work 25 years to receive annual cost-of-living increases to their benefits. They would receive 1 percent annually at age 55 and 2 percent at age 62.
Current and future employees will also see a future reduction in the “multiplier,” or the percentage of their pay they receive for each year of service. Currently, it is 2.625 percent; under the city’s proposal it would go to 2.5 percent.
Changes in state law also have limited the amount of accrued vacation time and sick leave that may be put toward retirement benefits. State law also caps the amount of overtime that may be factored in at 300 hours a year.
As it stands, the lone bargaining unit not to sign off on pension changes is the firefighters union, which has been in talks with staff for 18 months.
“So far we haven’t found the right combination that saves the city the dollars they think they need to save and still is an attractive package for new hires,” said Lt. Tracey Higdon, the president of the city’s firefighter union.
While a state requirement for public employees enrolled in the Florida Retirement System to begin contributing to their own retirement plans sparked a lawsuit, that requirement has been in place for decades for the city’s plan. Police officers and firefighters in the plan contribute 7.5 percent of their annual salaries.