BALTIMORE, MD – Baltimore’s police and fire unions are fighting a new proposal from Mayor Stephanie Rawlings-Blake to privatize part of the pensions of new employees — a move union officials argue will make it harder to recruit and retain the best young officers.
City finance officials say the privatization plan is the latest step needed to save the Fire and Police Employees’ Retirement System, which they say is struggling and carries a $765 million unfunded liability. But union officials say the threat of pension collapse is overblown, and maintain that weaker benefits will cause talented recruits to go elsewhere.
“The union vehemently opposes it,” said Rick Hoffman, president of the city’s firefighters’ union. “It’s not going to get us the people we need to grow Baltimore. We are going to go back to the days where we couldn’t keep paramedics.”
Rawlings-Blake proposes a “hybrid” pension for new police officers and firefighters, rather than the traditional pension that legally guarantees retirees will earn at least 60 percent of their salaries after 25 years on the job. The unions say the new plan would guarantee new workers a pension that pays only about half as much as what current employees will receive.
A traditional pension guarantees a defined level of pay, while a 401(k)-style plan is subject to the ups and downs of the financial markets.
The administration bill is pending in the City Council’s finance committee, where chairman Carl Stokes said he plans to let the two sides negotiate before calling a vote.
Deputy Mayor Andrew Smullian said the administration wants to negotiate with the unions but recognizes the two sides might not ever see eye-to-eye.
“The status quo is not an option,” Smullian said. “We understand they want the most lucrative pension. We might never come to an agreement, but we’re at the table.”
Baltimore Police Commissioner Anthony W. Batts referred questions to the mayor’s office. Ian Brennan, a spokesman for Fire Chief Niles Ford, said he’s backing the proposal.
“Chief Ford supports the mayor’s plans to improve the city’s long-term financial stability,” he said in an email.
The move isn’t the first time the unions and the administration have battled over pensions.
In 2010, Rawlings-Blake introduced a pension overhaul that included cuts to existing police and firefighters’ benefits. The unions responded by picketing City Hall and posting billboards accusing elected leaders of turning their backs on public safety workers. A legal fight ensued after the City Council eventually backed the mayor’s plan. That case is still pending in federal court.
City police and firefighters pay 10 percent of their salaries into their pensions. Other municipal workers recently began contributing and will eventually pay up to 5 percent of their salaries into the fund.
City finance director Harry E. Black pointed out that Baltimore’s unfunded liability continues to grow. Unfunded pension liabilities represent how much in contractual obligations the city would be unable to pay if they all came due today. For police and firefighters, the number rose from $712 million to $765 million last year.
“What the city is proposing would provide for a dignified retirement for new hires,” Black said. “What has been proposed would be sustainable in the long haul.”
Robert F. Cherry Jr., president of the city’s police union, said Baltimore’s pensions already pay less in benefits than those in surrounding jurisdictions. He noted police and firefighters aren’t eligible for Social Security benefits, and their pension system is in the black year-to-year.
“For police and fire, the nature of the job contains a lot of risk,” Cherry said. “This is going to significantly affect the police commissioner’s ability to recruit.”
Cherry argued that Baltimore would be one of the first cities in the country to shift to a hybrid system for police and firefighters. He said Philadelphia has implemented a voluntary hybrid system, and only a handful of officers signed up.
“They keep calling this a trend,” Cherry said. “I don’t know if you can call eight people in a voluntary system a trend.”
Smullian acknowledged what the mayor is proposing is a relatively new concept.
“We are at the forefront of what we’re doing. I don’t think we deny that,” he said. “But we’re not trying to be pioneers just to be pioneers.”
The city has already negotiated an agreement with unions representing non-public-safety municipal employees, in which new hires will be covered by a hybrid plan. It took nine months to reach that deal.
Councilman Stokes noted that both city police and firefighters recently negotiated raises with which the unions were pleased. He said he hopes a similar deal can be reached before his committee votes.
“We plan to hold the bill in committee while the administration and workers work out a compromise,” he said.
From The Baltimore Sun