Weekly News – Feb. 22, 2014

Philadelphia pension board in denial
In Philadelphia, as in many other places in the U.S., the pension system has run into funding problems. Part of the issue is that unrealistic expectations (such as projecting 9% average returns on investments) have been factored into the budget from the start. It’s easy during a good economy to assume and project that the good times will continue, but the reality is that it never will. The question is: will we ever learn that lesson well enough to manage our pension investments? In Philadelphia, a mere 1% difference in projected returns could mean as much as $100 million annually in the budget. That’s a decidedly tempting amount of money for politicians whose re-election could depend on it.

Court rules for cops in discrimination case
It took them five years, but a group of 29 Austin police officers have won their case against the city. Apparently the temptation to save money won out over treating employees the right way – something that is happening all too often in times of budget tightening. According to one officer in court: “I lost my seniority, years of service, rank, stipend pay and overtime. Younger officers with very few years of service received pay increases. The only reason ever given was the financial impact on the city.” Needless to say, “it will save money” is not a legitimate reason to discriminate against employees, and the courts ruled in favor of the officers.

OP-ED: “Unions launch war on truth”
This op-ed piece, written by a policy analyst for a conservative think-tank, neatly sums up many of the arguments being used against the practice of collecting union dues via a direct payroll deduction. If this is a debate you’re dealing with on a local level, it’s worth looking at just to get a sense of the talking points you’ll have to refute. They’re not against a little propaganda, either – between the “war on truth” and “paycheck protection” they’ve clearly given some thought to what will sound good to low-information voters who make decisions based on sound bites and catchy phrases.

Pension cuts will save $226 million – but at whose expense?
Desperate to get their pension system into shape, Chattanooga has proposed reforms that will fully fund it by 2039. Changes include a 37% hike in employee contributions, halving retirees’ cost-of-living allowances, and eliminating cost-of-living increases for the first three years of retirement. Local union leaders seem to think it’s worth it, fearing that if they let things continue without reforms, pretty soon there might be no money left for pensions at all.

New Bedford gets 4-year contract
In New Bedford, Mass., the city and police union have finally agreed to a contract which is retroactive to 2011 and will be good for another 16 months. Raises are somewhat meager, with no raises during the first two years and totaling only 4% for the rest, but the pot was sweetened by adding funds for educational benefits for officers.

Clash over contract negotiations
Sixty miles to the north, in Melrose, another police union is still unable to come to an agreement with the city over a contract that has been expired since 2012. Public safety employees in Melrose are pointing out that their compensation is drastically lower than comparable nearby towns and are trying to get this rectified. Recently, the union declared that negotiations were at an impasse, but the city disagreed and a few weeks later filed an unfair labor practice suit. Who knows, maybe one day we’ll all live in some kind of utopia where we actually work under contracts that have been signed in advance – but for right now, many of us are stuck retroactively negotiating contracts that are years overdue.

City, police union banging heads
In New London, Connecticut, the situation is becoming toxic. (Check out the list of “related stories” at this link to get an idea – accusations, lawsuits, firings, and feuds!) The city is accusing the police union of misleading the public with “half truths” while the AFSCME lawyer on the case, Eric Brown, says “There is clearly an anti-union animus coming directly from the Chief’s office. … I’ve never dealt with a police department as toxic as New London is right now.” The union claims the city is not honoring an agreement made in 2012 while the city claims that the union is trying to twist the prior agreement to allow new privileges. Hopefully both sides will be able to come to an agreement soon.

Detroit’s bankruptcy pension deal could dim golden years
This article takes a look at both sides of the coin when it comes to potential pension cuts for retired Detroit workers, from a former police officer with a $55k pension living on a golf resort to the 81-year-old widow of a Detroit Zoo worker scraping by on a $10,000-a-year pension. The average Detroit retiree is somewhere in between – around $24,000 per year, which doesn’t buy you much these days. It’s hard to imagine that most people living on these pensions can afford any kind of serious cuts, but they may have to find a way.