Judge: New Orleans Must Pay Firefighters’ Pension $17.5M

NEW ORLEANS, LA &#8211 A Civil District Court judge has ordered the financially hard-pressed city to immediately pay New Orleans firefighters $17.5 million to cover the city’s 2012 obligations to the firefighters’ pension fund. Judge Robin Giarrusso issued the order March 28, but it only became public Monday.

The city and firefighters have been battling in the courts for decades over how much the city owes in pension obligations and pay, with the firefighters generally emerging victorious.

Giarrusso’s order comes as Mayor Mitch Landrieu already has said the city cannot afford to pay millions of dollars to carry out pending consent decrees mandating improvements to the New Orleans Police Department and the city jail.

Firefighters union head Nick Felton said he hopes the city will meet with his group and “work something out.”

Landrieu spokesman Ryan Berni said Monday night that the city “is filing a motion for a new trial on the grounds that the ruling is contrary to the law and evidence.” He said the firefighters pension fund “is threatening the city’s budget and is costing the taxpayers too much” in part because it “is not properly managed and has made poor investment decisions.”

Berni noted that the administration is proposing several bills this legislative session that would “make benefits more sustainable and match authority for decision-making with the responsibility for payment” by giving the city more authority over the fund.

Meanwhile, though, Giarrusso issued a “peremptory writ of mandamus” ordering the city to “immediately budget, appropriate and pay” $17.5 million, plus interest, as the city’s “actuarially required contribution” to the firefighters pension plan for 2012.

Louisiana state courts, unlike federal courts, normally cannot compel political jurisdictions to pay legal judgments, but Louis Robein, attorney for the firefighters pension fund, said Giarrusso’s ruling makes clear that she believes the city can be compelled to comply with a clear legislative mandate to pay whatever sum is required to fund the system. Robein said, however, that any attempt to force the city to pay the money would probably have to wait while the city pursues its motion for a new trial.

The city offered a variety of arguments, both legal and financial, why it should not have to pay, but Giarrusso rejected them all. She said that under the law, the city has no choice but to pay the amount of money that the retirement plan’s actuary determines each year is necessary to maintain the plan on a sound basis.

According to the judge’s ruling, after the city failed to appropriate the required contribution in 2010, the retirement fund’s secretary-treasurer, Richard Hampton, alerted Landrieu and Chief Administrative Officer Andy Kopplin to the “funding crisis” in October 2010. The city asked for “forbearance” in 2011 but “proceeded to knowingly continue deliberate underfunding” the firefighters fund while fully funding the retirement systems for other employees, the ruling says.

The city has long contended that the firefighters receive overly generous longevity raises and retirement benefits because of laws passed by the state Legislature. More recently, Landrieu has complained that unwise investment decisions by Hampton and the board of the firefighters plan have jeopardized the system’s financial health.

However, Giarrusso ruled in effect that regardless of what the city thinks about the state laws or the system’s investment policies, and despite the jarring effect on the city’s overall budget, it cannot escape its legal obligations. Any further delay in paying what the city owes will “threaten the future viability of the fund,” which at present is only 33 percent funded, she said.

The city’s argument that the fund has $175 million in assets and can therefore pay all the benefits currently due “ignores reality,” the judge said, because the assets are being “cannibalized.”

Giarrusso noted that in presenting the administration’s proposed 2012 budget in November 2011, Kopplin told the New Orleans City Council that the city has no control over the firefighters’ pension system “other than to write the check. The rules are set under state law.”

Giarrusso agreed and ordered the city to pay up unless the Legislature changes the law.

From NOLA.com

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