The retirement cuts created a mere $77,000 savings in the department’s payment to the retirement system—this is only ½ of 1 percent of the three cities’ combined budgets ($77,000 divided by $17.8 million).
There is some confusion about if these cuts are justifiable when the three cities have a combined $10.5 million in cash reserves.
There was additional confusion about a proposal to direct $55,000 to reduce the present value of future promises in the retirement plan, which is what Commissioners and some elected officials claim to be a problem. The Chairman stated that this was not an acceptable use of funds, and that no additional money should be used to reduce the present value of future promises. The Chairman also emphasized that “the TMRS unfunded deal” and the “flat line budget” should each be considered independently, as separate issues. He offered no reasoning as to how, why, and there was no discussion as to the reasonableness of dividing the issues.
One proposal called for $124,000 be used for an employee “self directed plan.” The “self-directed plan” details such as program options, disbursements, and management have not yet been determined.
The Chairman stated disproval of the proposal, as that would add additional benefits to officers. One Mayor attended the meeting and offered his approval of using the money for a “self directed plan.”
The types of plan that would be considered ranged from a 401K-type plan, to a Health Savings Account, a Flexible Spending Account, and what the money could be used for—not to mention how much it will cost the officer and the department, how it will be administered, and how the money will be directed. It was also unclear if the employee would be required to match a certain amount in a “self directed plan;”currently, employees dedicate 7% of their salaries to a retirement plan.
Officers are skeptical that Commissioners will be able to decide on what a “self directed plan” will look like. There was a lot of disagreement about budgetary priorities and what is fair trade off. The disagreement is among Commissioners, as well as among City Councils. It is also hard to imagine that any plan will come to fruition when one Commissioner stated, that these “ [cuts in compensation are] not about taking away from the officers,” when in the next budget proposal, clearly officers are losing so the department can hold money for 2 years before a technology purchase, hold money for a raid on unused leave time, and refunding dollars to already abundant savings accounts.
A discussion ensued on the philosophy of funding unused, paid leave time. There were disagreements about whether the value of unused, paid leave time should be funded 100% this year, or if it should be spread out over several years. One Commissioner stated that it was acceptable to “recognize” it for accounting purposes, but unnecessary to “fund” it 100% in the current year.
There is no public discussion on if this is “worth it”—are the “savings” really savings, or is it a shell game of shifting costs around? And who will bear the ultimate burden? Please call your city council representative and all the commissioners and ask them to study the issue before cutting compensation.