Reform 4.2: Retirement Offset Contributions

Eliminate Retirement Offset Contributions.

Other Information:

The city’s pension system was established on the contributory plan – wherein the employer (e.g. taxpayers) makes a contribution and city employees are supposed to make a substantially equal contribution for the normal cost of their pensions. Unfortunately, there are several areas where the spirit, of not the law, of “substantially equal” requirement are not being followed. Within the budget, Retirement Offset Contributions “represent the amount of City employees’ retirement contributions that the City pays” for the employee3. The Roadmap to Recovery requires that the City end the practice of “picking up” any portion of employee pension contributions in addition to the employer contribution. While the City Council recently eliminated the offset for elected officials and unclassified/unrepresented employees4, employees represented by the Municipal Employees Association (MEA) and Teamsters 911 still receive a retirement offset contribution.5 The Roadmap to Reform plan eliminates the offset entirely for all City employees to help move City employees closer to paying the Charter-required share of the cost of their retirement. This is projected to achieve a General Fund savings of $4.8 million based on the Adopted FY 2011 Budget ($7.9 million citywide). The City Attorney has opined that eliminating the offset through the “Meet and Confer” process is legal, and recent precedent exists for doing so.6 Furthermore, the City will be negotiating new MEA and Teamsters labor contracts to take effect in FY 2012.

Indicator(s):

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