Bid To Turn Firefighters’ Pension System Over To City Of New Orleans Fails In Louisiana House Committee

A bid by the city of New Orleans to take over the troubled pension system that covers its firefighters was narrowly defeated in a Louisiana House committee Thursday. The Firefighters’ Pension and Relief Fund is overseen by the state but the city is required to pay for the benefits, a situation that representatives of Mayor Mitch Landrieu said puts the city in a precarious position.

Rodney Braxton, a lobbyist with Southern Strategy Group representing the city, said that because the city pays the bills it should be the entity deciding policy for the fund.

“What’s critical about this is it puts the onus back where it should be, back with the city of New Orleans because we’re the ones who are financially responsible,” Braxton said.

The measure, House Bill 52, is the second time in two years New Orleans has pushed legislation to turn control of the fund over to the city. A vote to approve this year’s bill failed 4-5.

Fund CEO Richard Hampton and New Orleans Firefighters Association President Nick Felton argued giving the city control would be akin to putting a fox in charge of the hen house. Felton noted that the city has traditionally underpaid its pension obligations, forcing the fund to take legal action. He also pointed out recent financial blunders such as a City Council decision to issue bonds so that $171 million could be invested in the stock market, a move that turned disastrous when the market tanked.

The committee debate included a number of other bills dealing with the pension system. Retirement Committee Chairman Rep. Kevin Pearson, R-Slidell, filed a package of bills on behalf of the city while Rep. Jeff Arnold, D-New Orleans, pushed a competing set of plans favored by the firefighters’ union.

In the end, the committee largely sided with Arnold.

A decades-long dispute over how much the city owes the pension fund also played into the debate. The pension system has lawsuits and outstanding judgments against the city worth more than $150 million, and Arnold said giving New Orleans control would create a conflict of interest.

“They’re going to control both sides of the line? I don’t know how that works,” Arnold said.

But Pearson argued state control contains its own problems, noting the firefighters regularly lobby legislators who don’t bear the responsibility of paying for the system for new laws that would increase benefits and cost the city more.

“I see it as you trying to expand benefits that are going to jeopardize the system more and cost the city more, and I don’t see how that can be a prudent fiduciary move,” he said.

Bringing the pension fund under the city’s control was the focus of a report released earlier this week by the Bureau of Governmental Research, a non-profit think tank. Throughout the dispute, both sides tried to characterize the other as responsible for the fund’s problems.

Throughout the debate, the two sides offered competing arguments for who was to blame for the current state of the pension system. Advocates for the city argued that overly generous benefits and the system’s board were to blame while Felton and Hampton said the problem was a lack of funding from the city and a bad investment environment.

Other bills altering the pension system did make it out of the committee.

One would trim the 10-member board, now firmly controlled by active and retired firefighters, to a seven-member panel. That board would be made up of two active and two retired firefighters, the superintendent of the NOFD, the city’s director of finance and an appointee of the mayor.

That board would only be able to approve cost-of-living increases for retirees by a two-thirds vote and, since two of the board members would be employed by the mayor and a third would be his appointee, that would require both sides to compromise, proponents said.

Another measure would gradually increase the contributions firefighters pay into the system to help pay down the debt. Firefighters now pay 6 percent of their salary to the pension system if they’ve been on the job for less than 20 years and nothing if they’re passed that point.

The bill would increase both of those contribution rates to 10 percent of each firefighter’s salary. Those with less than 20 years experience would see their contributions rise by 2 percentage points a year over two years. Those with more than 20 years experience would be required to start out by paying 3 1/3 percent of their salary the first year, an amount that would increase by 3 1/3 percentage points in each of the next two years.

From The Times-Picayune

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