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Union balks at council’s pension plan changes

By Staff | Dec 29, 2010

Following the Dec. 15 action of the City Council to adopt a resolution to settle a contract dispute between the City of Sanibel and members of the American Federation of State, County and Municipal Employees Local 3228, the union spokesman has revealed that there is some confusion over changes to their pension plan.

“They are confused for three reasons,” said Roy Gibson, a member of the city’s Planning Department and AFSCME spokesman. “One, the mayor said on Wednesday that e-mails to council are running 9-to-1 against the employees. According to the e-mails we have received from our public information request, I think the e-mails are actually running in favor of the employees.

“Two, the city only talks about select revenues declining,” he continued. “It does not mention that as a whole, city revenues have been steady for the past four years. According to the audited financial statements, total revenues were $31,338,162, $31,193,162, $36,967,307 and $31,440,786 in FY09, FY08, FY07 and FY06, respectively.

The spike in FY07, Gibson noted, was due to a $5.5 million payment from Lee County and the Lee County School Board for the Sanibel Recreation Center.

“Third, the pension board’s actuary has explained to individual council members that an unfunded liability is equivalent to a mortgage,” he added. “Few people could write a check to pay off their mortgage today, but people regularly pay it off over 30 years. Knowing this, why does council contend this is an immediate problem?

Prior to the Dec. 15 special meeting, the city did agree with the union’s position regarding vesting period increases from five years to six years, grandfathering employees with 17.5 years of service under the current eligibility for normal and/or early retirement as well as a one-time, irrevocable Opt-Out Option to change from a defined benefit plan to a defined contribution plan.

At the meeting, council voted unanimously to accept City Manager Judie Zimomra’s proposed pension plan changes, including lowering the multiplier to 1.68 percent, a cost of living amendment of 2 percent annually after five years of retirement and early retirement eligibility at age 60 with six years of service.

The council did agree to keep employee contributions at 5 percent.

However, that concession has not satisfied many among the 67 city employees affected by the plan.

“Employees are disappointed because with the more than $100,000 of taxpayer dollars spent on attorneys and actuaries, not one dollar has been spent to calculate the amount of savings the employees’ proposal would generate,” he said. “Why are our proposals to cut retirement pay by 17 percent and the cost of living adjustment by 27 percent being dismissed without being calculated? We can only conclude that council has a solution in search of a problem and that is disappointing.

In early November, Special Magistrate Irving Rosenbaum issued his recommendations on a number of changes to the plan. The magistrate made his recommendations after reviewing city finances, the specifics of the current pension plan and all proposals for change to the plan.

However, the city notified the State of Florida Public Employees Relations Commission on Nov. 22 that they had filed an official notice to reject Rosenbaum’s recommendations.

“The council rejected everything the Special Magistrate said in his 17-page report,” said Gibson. “Considering the depth and breadth of the cuts recommended by the Magistrate, does it really seem he did not ‘recognize’ or he ‘ignored evidence’ that the city wanted to decrease benefits?

According to Gibson, Rosenbaum recommended cutting the multiplier from 3.0 to 2.5, effectively reducing retirement pay by 16.7 percent; cutting the Cost Of Living Adjustment from 2.75 percent after three years to 2 percent after five years and increasing the early retirement age by two years.

“Has it occurred to the council and the City Manager that the Special Magistrate actually did his job correctly and he did ‘recognize’ and did not ‘ignore’ anything?” Gibson asked. “What really happened was that this highly regarded, independent, third party Magistrate arrived at an unbiased compromise that did not match the City Manager and City Council’s biased ‘politically motivated’ views.

Gibson said during his presentation at the Dec. 15 session that he believed political influence coming from the council prevented Zimomra from coming to an agreement with the union.

Vice Mayor Mick Denham took offense that Gibson implied during his presentation that the pension plan changes suggested by the Special Magistrate were rejected because of a “political agenda.” Mayor Kevin Ruane also rejected Gibson’s assertion.

“Roy, I’m looking at you right in the face,” Ruane told Gibson. “This is not political.

The union did expect the council to decrease some benefits of the pension plan, but they were anticipating what Gibson qualified as “reasonable cuts.” However, it does not appear that the council’s accepted terms for changes in the plan are favorable to all of the union employees.

“Sanibel is a great city known the world over for many wonderful things,” Gibson added. “It’s a shame that it is now on a course for the dubious honor of ‘worst government employee retirement plan in Florida.'”

The pension plan ordinance is anticipated to be introduced on Tuesday, Jan. 4, returning for final adoption on Feb. 1. Public comment on the matter, which was prohibited during their last session, will be allowed.