Mayor Chris Beutler announced Thursday the city will likely no longer give city employees a 2-to-1 match on their retirement accounts. But union leaders say it's not that easy.
the Lincoln Journal Star | Posted: Thursday, July 2, 2009 12:00 am
Flanked by five City Council members, Lincoln Mayor Chris Beutler announced Thursday the city will no longer give its employees a 2-to-1 match on their retirement accounts.
He said the council intends to pass an ordinance that would end the practice for new hires. Effective Jan. 1, new civilian employees would get a 1-to-1 match. Police and fire employees have separate pension plans.
Existing employees will continue to get the more generous match, in which the city chips in $2 for every $1 employees invest in their retirement.
But union officials say any change to the pension must be negotiated, and the city must return to the negotiating table if it wants to alter the benefits.
About 1,400 of the city's 2,000 employees are eligible to participate in the defined contribution plan.
Beutler said the generous retirement benefit has become too big a stumbling block for many Lincolnites to stomach. He and some council members say the issue comes up often on the campaign trail and in coffee shops.
"That generosity is inhibiting Lincolnites' willingness to invest in our future," Beutler said. "They're asking why our tax dollars are financing retirements that they themselves can't."
Many private companies have reduced or eliminated such matches because of the recession. And although the City Council has talked about decreasing the city match for years, this is the first move toward doing so.
Beutler said he hopes employees see that the change is "critical to preserving their jobs in the future."
Jeff Stump - president of the Public Association of Government Employees, which represents about 500 blue-collar, clerical and technical employees - said union heads were notified of the mayor's plans last week.
His union sent the mayor a letter saying any such change should be negotiated. If the council approves an ordinance lowering the match, he said, his union will meet to discuss its options.
The union has wrapped up labor negotiations - and agreed to a one-year contract with 1.75 percent raises - but would be willing to go back to the table to talk about the retirement plan.
The change won't save money in the long run, he said, because the city will have to increase salaries for new hires to make them commensurate with their peers.
He said at one point the city had devised an alternative defined benefit plan for civilian employees, but those talks never went anywhere. He believes that would be a better course of action.
City Councilman Doug Emery said when he ran for office two years ago, conversations with constituents invariably turned to the generous retirement benefit, coloring people's perception of city workers.
Beutler said the change is not a commentary on the value of city employees, whom he said have "done more work with fewer resources" after years of budget cuts.
While some council members would like to have reduced the match for existing employees, too, several years ago an independent consultant told the city that wasn't feasible; it must keep its promises to those employees.
Since the change would only apply to new hires, it wouldn't immediately reap huge savings, but city officials have estimated it could save $2.2 million over the next five years.
The match started out at 1-to-1 in 1961, but the City Council began gradually increasing it in 1975, and it hit 2-to-1 in 1978.
Emery said he believes city unions and employees have been unfairly blamed for the generosity of former councils.
With many longtime city employees in the ranks, he said, the benefit will phase out in coming years.
"While this may not be a perfect solution, I believe it is a step in the long process," he said.
Councilman John Spatz called the change "somewhat of a bold move."
"This is the right time," he said. "I don't want this to be a barrier anymore."
Gary L. Young, attorney for three city unions (two of which would be affected by the change), said employees represented by PAGE would be most affected, because the other unions have more middle to upper managers, not entry-level workers.
He said although the pension is created by ordinance and is not contained in labor agreements, the Industrial Relations Act requires city officials to negotiate a change to the pension.
"It is a wage and condition of employment, and the law requires the city to negotiate any changes to the pension," he said. "(Beutler) has not yet responded to our request to sit down and negotiate this with him. … It appears as though the city is attempting to do this unilaterally."
Reach Deena Winter at 473-2642 or dwinter@journalstar.com.