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City retirement benefits need changed

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Saturday, Aug 16, 2008 - 01:06:46 am CDT

Before the dust settles on the 2008-2009 city of Lincoln budget, it’s a good time to once again bring up the specter of employee retirement benefits and how they constitute a burden on taxpayers.

In the past few years, those trying to balance the city budget have brought up the point. This year, Lincoln Independent Business Association Executive Director Coby Mach called for lowering the retirement match.

Civilian city employees (fire and police workers have their own pension plans) contribute 3 percent of the first $4,800 of their earnings, and the city contributes 6.3 percent. After that, the city contributes 12 percent for workers who put in 6 percent.

Many workers in the private sector can’t help but be green with envy looking at that deal, especially when they realize it comes at the expense of city funds direly needed to maintain services.

Private-sector plans average employer contributions of only 50 cents on the dollar.

Even Lancaster County employees don’t get such a deal: Their employer match is $1.50 on the dollar.

“We can’t find anybody where you can earn a 200 percent immediate match on your retirement,” Mach said this month. “In fact, if we reduced it to 100 percent, it would be extremely generous.”

Mayor Chris Beutler in June had called the match “out of touch” with the private sector and had proposed possibly reducing it to $1.40 per dollar.

Mach said making the match 100 percent, or dollar for dollar,  would save the city $3.3 million per year.

The Journal Star editorial board feels continued frustration at the city’s inability to change this system.

When City Council Republicans sought to reduce the match in 2006, Personnel Director Don Taute said such a reduction likely would violate the city’s contract with employees because when the state decides whether salaries are appropriate, it looks at overall compensation and benefits. Taute said at the time that such a change would have to begin with new hires and be negotiated with the city’s employee unions.

The state law that requires city governments to pay wages and benefits comparable to those in other cities rears its head again.

The Journal Star has advocated changing the system to allow more reliance on comparisons with the private sector.

The point bears repeating.

It’s no wonder public employees contribute to retirement plans at a far greater rate, nearly 75 percent, than those in the private sector, about 42 percent, according to the Employee Benefits Research Institute.

The system needs to change.


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Tiring wrote on August 16, 2008 7:30 am:
" Yes, I'm a city employee. I easily found an advertised opening, I applied for a job, and I was hired. Others also applied. I was not pre-ordained to have the position; it was an opening advertised for everyone. I work more with the public (which can be trying at times) much more than I did in my private sector jobs. I am part of a union that negotiated my benefits for me - I am not allowed to strike, however. I don't see anyone complaining about other unions and their benefits. Sometimes I feel like I get paid in body blows after reading different stories and comments about city employees. We are as a whole, dedicated and competent workers who go to our jobs and do them, just like everyone else. I'd be eager to hear the private sector jobs that compare better with city jobs that comparable positions in other cities. "

 Max A. wrote on August 16, 2008 7:40 am:
" The City needs to renegotiate the retirement match! Why hasn't this been done long, long ago? My employer matches me up to 3% which is better than nothing. The City would reduce its budget considerably if they reduced their match to 3%. "

 Julia wrote on August 16, 2008 7:55 am:
" Well said! And the same should apply to LES which also gets a two-for-one match. This is unheard of in the private sector. "

 RJ wrote on August 16, 2008 8:38 am:
" Here is a different thought. Why not have the private sector raise its contributions instead. Here in lies the problem with the so called Nebraska "brain drain". It the problem is not taxes, it is compensation including benefits. When our graduates can to down the road to KC and start at $10K more a year and cost of living is hardly different then where do you think they will go. Sometimes the private sector needs an incentive to do their job in making the state attractive. Lowering the retirement match for government will make Nebraska less attractive to employees. "

 Jim wrote on August 16, 2008 8:49 am:
" The Democrats will never even suggest the obvious. They depend of the city worker as a voting block. You wonder why our school system is falling apart and we are unable to apply much needed changes, right? The Democrats depend on this group and therefore, they cannot propose change. "

 for ljs info wrote on August 16, 2008 8:55 am:
" The employees cannot turn down the retirement benefits. At age 28 or with 3 years into their career, the city and county make it manditory to sign on. The unions do have contracts with the city and county for wage and benefit packages. If the city or county break a contract it's the same as any other contract, someone has to pay. Negotiate a new contract and take the retirement benefit down at that time. Something else to look at is sick leave accumulation. It tops out at around 2700 hours. Employees who retire get paid 1/3 of the unused sick leave. The other 2/3 goes into a long term medical to pay medical after retirement. This does help get people to retire as many don't make enough money from social security to pay the medical until they can get to medicare of for supplemental insurance. I would have made about 850 a month from social security except I went back to work after retirement and paid some large amounts into social security. At least they are paying in from work and not sitting at home complaining that the government doesn't pay enough to quit work at age 30/ "

 Mike wrote on August 16, 2008 9:27 am:
" I don't much about this issue but maybe it shows that private businesses aren't providing the correct match. What I would like to know is how this compares to the quality jobs in the city, such as Duncan, Windstream, etc. If it is comparing it against all private sector jobs (McDonald's??) then of course it will look out of whack. "

 Well why wrote on August 16, 2008 9:30 am:
" should the city employees get such a plan at our expense? These employees hold a position that we as the taxpayer are suppose to get help from. I wonder if some sre there to get that retirement and could care less about what type of service they give? There are also employees who go above and beyond. Does the city have any type of system in place to reward or is it such a secure job that you will get that retirement regardless of how you treat people? I am sure Don is trying to protect his own reaping of taxpayers money by stating the above. There isn't one of you who should complain about your benefits when you retire. "

 Donald wrote on August 16, 2008 10:11 am:
" I take exception to your opinion that public employee retirement benefits should be reduced.

You, the mayor, and your friends at LIBA and the large employers coalition are going to ruin the excellent service and reputation of the City and LES with your quest for cost reductions and lack of understanding of how the public sector is run.

You don't seem to realize that private employees and public employees operate in different environments for one thing. Many private employers have stock option plans, a host of other benefits, and even pay for retired employee's health care. Those benefits do not exist in the public sector. The only benefit that seems to be left is retirement. A lot of other benefits have already been cut, or the costs shifted to the employees. Plus, wage increases are not keeping up with inflation.

The other fact you seem to ignore, is that the public sector is competing for employees locally, regionally, and with other organizations for employees. If you want to continually bash public employees and their benefits you sre going to get organizations with third rate employees and poor service.

Eventually, morale and service are going to be affected in the public sector if they haven't been already.

You and the community at large are spoiled by the fine services provided.
The next time electicity goes off at 2am at one of our hospitals and there is no one to answer the call for service, ask yourself if you have really saved money.

So, the next time you think you have won a victory by bashing public employees and reducing their numbers or benefits, instead you might have done just the opposite with the relentless attacks on hard working, dedicated employees. "

 LIBA Watcher wrote on August 16, 2008 10:26 am:
" Change the system? OK, Journal Star, as long as you're willing to give those city employees the right to strike, which they don't have under the current system.

City employees have over the years, negotiated a contract that has given up substantial salary in exchange for more liberal retirement benefits. And even with the combined package, city employees still fall well short of what other, comparable cities pay.

And truth be told, if the private sector were to be as transparent as our government, we'd find there are plenty of businesses with as liberal, or more, retirement benefits. I know of one -- I work there.

And on a final note: LIBA would cheer and rave if a business were to bring in 50 new jobs to Lincoln. But we lose 52 jobs in the new city budget, and that gets cheers, too. Those jobs belong to people who pay local taxes, buy local products, use local services -- those dollars go through the local economy six or seven times over. Government spending must be done wisely, granted, but government spending IS economic development as much as any other new business. "

 From out of state wrote on August 16, 2008 12:12 pm:
" I moved here from out of state. Not all the brains are leaving the state. I don't have the benefits package that the city employees have. My employer contribution is modest and the retirement health care essentially non-existent. I don't have the right to a union let alone strike. Why do some of the city employees think if their benefits aren't excessively high, they should strike??? I can't believe that these employees couldn't be readily replaced. I've not met a city employee who is not replaceable and never known any that could demand or receive such great benefits in private sector employment. "

 The Real Problem wrote on August 16, 2008 2:14 pm:
" The real problem is not that City employees are given good benefits (wow..what an idea..maybe private business should do the same). The REAL problem is LIBA's continual attempt to control City matters. Maybe the Mayor should worry more about the City employees and less about bowing to the groups in this town who think they should set policy for the rest of us. Hey LIBA..... if you want to offer suggestions...get those you represent to provide living wages to their own employees. Now there's a suggestion for ya! "

 CS wrote on August 16, 2008 4:16 pm:
" Where I work it is a match of 3% of your contribution on up to 500.00. Yippee. "

 Observer wrote on August 16, 2008 6:55 pm:
" It is my understanding that Lincoln Public Schools employees who retire receive a reasonable pension for the rest of their lives. This benefit must be costing the taxpayers more than city employee retirement benefits but no one seems to know or care about it.

I agree with those who say city employees are for the most part dedicated and hard working.

The public has not really been informed of how many city employees lost their jobs or what their responsibilities were. It might surprise the public to know that for the most part direct service employees were let go while management staff remained the same.

I would suggest that as far as city personnel policies are concerned much more than the retirement benefits could be looked at. "

 Appreciate City Workers wrote on August 17, 2008 3:25 pm:
" I read somewhere that city wages and benefits have to be comparable to OTHER city wages and benefits by law in exchange for not striking - a defined benefit plan is what is comparable - Omaha has one. Omaha pays for a retiree's health insurance. When City of Lincoln civilian employees retire, they take with them the balance they have vested. The City is NOT RESPONSIBLE FOR ANY further contributions. When someone in a defined benefit plan retires, the city is on the hook for the rest of that person's life for a large percentage of their salary. LIBA and Coby seem to think that isn't so - and fail to appreciate that when this plan was negotiated, it saves the taxpayers of Lincoln millions and millions of dollars - Sure you can reduce the match and save a little more, but does that keep the compensation plan competitive and comparable? Be careful what Coby excites you to do - because it could be costly. If City employees accumulate less, it will mean they will work longer to be able to afford to retire. The sky is not falling - LIBA is afraid they will have to pay better benefits to get quality workers... Taxpayers should expect the City to hire the best - in turn they will have higher productivity, quality of work and lower turnover - Turnover is very expensive. Lets challenge LIBA, to improve economic development, promote the good things about Lincoln, bring in good paying jobs with good benefits, and we'll check on them next year, and if they haven't succeeded, we'll reduce their pay and benefits and reorganize the staff!! I'm sorry "Tiring" has to take this kind of abuse to do his/her job. People don't seem to get that Coby and friends are about stirring the pot - nothing more - after all, he needs sponsors for his radio program - Check out this link - http://www.tmrs.org/ Texas Municipal Retirement System. You'll see a 2 for 1 option there - It may not be as unusual as Coby wants you to believe - He's a competitive guy with a win at all costs mentality. Have you looked at Federal benefits? Thanks Donald for your comments. "

 Go LIBA wrote on August 17, 2008 4:43 pm:
" Wow, all the city employees are blogging this story. I could not believe what I read, so I went to the city web site and looked at the contract. Maybe it's time LIBA looked at the GREAT insurance the city staff has too. It says - - If an employee elects single coverage, the City shall
contribute ninety-eight percent (98%) of the monthly cost and the
employee’s contribution shall equal two percent (2%) of the monthly
cost of coverage. if an employee elects 2/4 party or family
coverage, the City shall contribute an amount equal to eighty-six
percent (86%) of the monthly cost of coverage and the employee’s
contribution shall equal fourteen percent (14%) of the monthly cost of
coverage. These benefits are out of control! "

 Who Pays Taxes wrote on August 17, 2008 6:01 pm:
" I admit I am a city employee. My yearly average is 60 hrs/week. I do not get overtime pay as I am part of management. I could work more, but I also want to spend time with my family. In the private market, my peers make double my salary. My retirement helps balance the difference in salary. I care about my retirement so that I don't have to rely on SS or government subsidies. I pay local property and sales tax, and federal and state taxes. A very active member of LIBA pays NO local property tax and no/very little in federal/state income tax. How many other LIBA members are like this? The City should be a good role model for other employers. It should encourage other employers to invest in their employees and the community. It should not be shamed for being responsible and a good employer. "

 I challenge LIBA watcher to wrote on August 18, 2008 1:15 am:
" quote his source that dollars paid in wages have trade turn of "six or seven times over". This is the most misused statement by politians for over 50 years and is absolutely incorrect. If you want the source of the real "trade turn" history, and wish to have it supported by facts, you will need to research exactly how President Roosevelt and his policy makers studied the facts of the US Government balance sheet and the seven sectors of the US economy. Repeating a falsehood as did LIBA watcher does not make it fact. "

 I challenge WHO PAYS TAXES wrote on August 18, 2008 1:24 am:
" to explain the difference between a government subsidy and being over compensated by the government in the retirement plan. When you receive your subsidy does not change the fact that it is a subsidy. Your wage is being subsidized by a direct cash contribution to your retirement plan because you cannot earn enough by wage alone. Wait a minute, are we talking about City workers or the historically low price of grain? WHO PAYS TAXES has an opportunity for new view of farm subsidies. We have to have massive grain production and we have to have hard working city employees. If we don't pay them, we won't have them. "

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