Pension changes: The new cars and DROP? | Philly

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Thursday, June 18, 2009

Pension changes: The new cars and DROP?

Today, an bill was introduced in City Council that would radically change the structure of the pension benefit for city employees. Sponsored by Councilman Darrell Clark on behalf of the Nutter Administration, the proposal would replace the current system with a hybrid of a defined benefit plan and a 401(k). Any employee hired after July 1st would be enrolled in the new program.

City Finance Director Rob Dubow says the change could save $500 million over the next thirty years. That might be true, but I can't help but wonder at the timing of this proposal. In some ways, it reminds me of Nutter's call to eliminate DROP and cars for elected officials at the outset of the city budget process. How so? Let's count the ways.

First of all, it's a controversial proposal that's being made at a critical moment. Nutter tried to get Council to kill DROP and cars at the start of the budget process. Now, he is publicly signaling a desire to change the pension benefit for city workers just as contract talks are heating up. Like the cars and DROP proposal, it's likely to anger union leadership.

Another similarity is the lack of control that Nutter has over the issue. In order to get these changes, he'll need to convince the unions to go along. For uniformed workers, that'll have to happen during arbitration hearings. Non-uniformed workers will have to agree at the bargaining table. I can't imagine any of the unions going along with these changes and Nutter has no real incentive to make them go along.

Union leaders told the Daily News that they were given no advance warning about the proposed change. That sounds like the same blues sung by members of City Council, who were shocked to be called out during the Mayor's budget address.

There is one critical difference between changing the pension plan and eliminating DROP and cars for elected officials. If city officials are correct, altering the pension plan could save the city a lot of money in the long run. On the other hand, getting rid of perks for City Council is almost entirely symbolic.

Posted by Ben Waxman @ 10:22 AM Permalink | 7 comments

Comments

Posted 08:44 AM, 06/19/2009

Flyingcamel

I can't help but wonder what the administration is thinking. This at the very moment that millions of American's retirement hopes are getting slammed by failed 401ks. It says a lot about the Nutter administration's ideological commitments. If anything, its a time to strengthen pensions and move away from 401ks.

Posted 02:28 PM, 06/19/2009

CleanupPhilly

Nutter doesn't "need to convince the unions to go along." Unions don't need to vote on this proposal, Council does. There's no law that says the unions have to have a contract. They don't. They can choose to work or not work without one. IF the city won't approve a contract, then it actually gives the city more flexibility to hire nonunion employees.

Posted 02:31 PM, 06/19/2009

CleanupPhilly

It's just fundamentally incorrect that "non-uniformed workers will have to agree at the bargaining table" or that "he'll need to convince the unions to go along." The papers have to accept what labor law really says. Start with Reagan versus the Air Traffic Controllers.

Posted 02:40 PM, 06/19/2009

CleanupPhilly

"...most state and federal laws start from the presumption that workers who are not covered by a collective bargaining agreement or an individual employment agreement are "at will" employees who can be fired without notice and for no stated reason..." from the Wiki entry under "United States Labor Law." So it seems that the conventional wisdom that on collective bargaining agreement = at will firing/layoffs/furloughs. This simply is what the city has to do. You're right about DROP and cars, the contracts are the a budget make or break.

Posted 02:42 PM, 06/19/2009

CleanupPhilly

For this reason, it strikes me that the city non-uniformed employees need their collective bargaining agreements a lot, and the city needs to NOT let them enter one. That's how I call this strategy set up. The city no way is going to sign off on a contract, and the worse the unions act, the more cause they'll have to find at-will reasons to terminate, like budget constraints.

Posted 02:45 PM, 06/19/2009

CleanupPhilly

This not only affects city employees, it affects journalists, so I expect to see a more informed outline of PA labor law and the concept of at-will employment and what it means. You have to do this for yourselves as well, so do it generally. Start with http://en.wikipedia.org/wiki/At-will_employment

Posted 02:48 PM, 06/19/2009

CleanupPhilly

Flyingcamel, this administration is thinking that it has to cut at least $614 million dollars for the property tax and sales tax hikes it didn't get. That means that we can't afford to have the same number of city employees we had since the original Rizzo. You can't fire them at-will while they have a contract. Nutter doesn't need the nonuniformed city employee vote because he has a more broad appeal. The unions and the journalists have to start to be honest about the law -- it's on Nutter's side if he wants to furlough, layoff, or terminate large swaths of noncritical employees.

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