Reform 4.8: Pensionable Pay
Reduce and Freeze “Pensionable Pay” for Five Years. Other Information:
While the City is limited in its options to change pension benefits for existing employees, it does have control over annual
salaries and wages through the negotiating process. The City Attorney has opined: 12 “As a general rule, the terms and conditions
of public employment are governed by statute or ordinance rather than by contract, and employment benefits, including compensation,
may be modified or reduced as long as the City complies with any applicable procedural requirements.” We obtained a model
of a “hard” pay freeze – one that assumes that payroll is held constant in each year. It is important to note that the City
has maintained the practice of awarding “step” increases as called for under Personnel Regulations.13 As explained in Reform
4.1, the City can achieve over $8 million in savings in FY 2012 from the prior general salary freezes. While the City could
propose temporarily freeze step salary increases in negotiations, such a proposal could be more difficult to attain in the
“Meet and Confer” process than other labor cost savings (for example, a general salary freeze or reduction) because of legal
issues created by Charter section 130 (additional information provided in the “Step Increase Freeze” section below). As a
result, in our FY 2012 recommendations, we focus on general salary cuts and various options for cost savings with special
pays. The graph to the right shows the range of estimated impacts from implementing an indefinite pay freeze. We are not suggesting
that pay be frozen through FY 2024, but provide the analysis to display the ability the City has through a freeze to impact
its annual pension payments. The “General Freeze” is an estimate that accounts for step increases, while the “Hard Freeze”
shows the estimated impact to City pension payments from holding pensionable payroll at a truly frozen level.
Indicator(s):
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