Bloomberg proposes changes to NYC pension system to save city from financial disaster

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New York’s Mayor Michael R. Bloomberg announced a proposal on Wednesday that would end some of the city’s most generous pension provisions for its workers and save billions of dollars in the process. He said unless there is aggressive pension reform, the current system will soon bankrupt the city.

Bloomberg, who until recently, was considered an ally of the unions, is now in the position of drawing their ire.

Vowing to save the city from bankruptcy, NYC Mayor Michael R. Bloomberg proposed controversial pension reform.

Some of the proposed changes include mandatory 10 years of employment before new hires are eligible for benefits– double the current number of years, and require them to be at least 65 years old before receiving benefits. Currently, workers can begin drawing benefits as early as age 57, and many cops and fire fighters receive full benefits after 20 years, no matter how old they are.

Another proposed change would prevent employees from being able to use overtime wages in determining the base for their retirement pay, a controversial and widespread abuse known as “pension spiking.” City managers routinely allow retiring workers to load up on overtime in their final year before retirement, often increasing their pension payments by over 50 percent.

All new city employees would be required to pay more of their own monies into their retirement accounts, and some existing employees, mostly police and firefighters would lose some existing benefits, namely a $12,000 annual stipend they receive in addition to their regular pension.

“This reflects the dire fiscal circumstances the city faces, the devastating impact of increasing pension costs and the desperate need for aggressive reforms,” said Marc La Vorgna, a mayoral spokesman told the New York Times.

The current move is an about-face for Bloomberg, who in the past has used generous pension benefits as a way to keep the city’s 300,000 workers happy and prevent them from striking at times of contract negotiations. As recently as 2008, Bloomberg helped push through a new teachers union contract that included a pension provision allowing them to retire five years earlier than before, with full retirement benefits.

Later that same year, as the financial crisis was in full swing and wages were stagnant throughout the country, Bloomberg gave the city’s largest municipal union back-to-back 4 percent raises, without any concessions on pension benefits.

If successful, the changes could immediately save the city at least $200 million per year, although far larger savings, in the billions of dollars would be further down the road.

One union official, angry over the proposals, called Bloomberg a “dictator.” Harry Nespoli, chairman of the Municipal Labor Committee, an umbrella group of unions, said that Bloomberg had “has set back labor relations 40 years.” Nespoli added “We’re fed up with this. He’s going to have a battle. We’re just not going to roll over.”

Teachers union chief, Michael Mulgrew, called the mayor “insane,” and said that Bloomberg “has just decided, I’m going to attack, attack, attack everybody.”

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California releases eye-opening salary database for all cities and counties

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The controller’s office in Sacramento has just released a database of the annual pay and benefits of all employees of cities and counties throughout the state of California.

The specific employee names have been removed for purposes of confidentiality, although the job titles of each position is listed. The complete list can be found here.

When compiling the list, the controller counted total 2009 wages as the amount reported to the federal government for Medicare tax purposes. That total includes bonuses, overtime, deferred compensation, and paid-in-cash sick leave and vacation days.

There is also a column called “applicable defined benefit pension formula”, that shows two numbers separated by a “@” symbol. The first figure is a percentage of their final annual pay that they receive when they retire, and the second figure is the age at which they can retire.

For example, most public safety officials show the code, 3@50. This simply means that they can retire at 50 and receive a pension equal to 3 times the number of years of service. If such an employee retired at age 50, with 30 years of service, they would receive retirement pay equal to 90 percent of their final year’s salary.

Some of the figures are eye opening. Burbank shows that one its firefighters earned $165,347, a library director earned $156,193 and an electrician $118,243.

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San Diego firefighter gets $424,000 in lawsuit after being punished by city for calling out pension abuses

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Paul Vandeveld though he was doing the right thing in 2006 when he agreed to provide information to then-City Attorney Michael Aguirre about the commonplace practice in the department called “pension spiking.” The practice involves promoting department employees to higher paid positions immediately before they retire, in order to get substantially higher pension benefits from the city’s pension plan.

Paul Vendeveld was held back from promotions after he agreed to provide information to the city attorney about pension plan abuses.

Shortly thereafter, Vandeveld, 44, tried to help a fire captain that was being harassed by fellow firefighters, because many in the department thought he had leaked information to the press about a battalion chief who had been arrested for drunken driving.

The firefighter sent out an email defending the battalion chief using a phony email address containing the name of a prominent union leader, so that it would be read by recipients. A few hours later, feeling remorseful, he sent an email saying that it was he who had sent out the earlier email.

A subsequent investigation found that he was guilty of conduct unbecoming of a firefighter, and was briefly suspended. Afterwards, he was repeatedly passed over for promotions to captain, even though every job review ranked his job performance as “satisfactory” or “outstanding”, and he was “next in line” for promotion.

Vandeveld’s attorney said that the fire department used the benign email as an excuse to punish him for cooperating with the city attorney in the pension spiking investigation.

“This firefighter was cooperative with and supportive of the efforts of the City Attorney’s Office to eradicate wrongdoing in the pension system,” Aguirre said. “He was trying to help to do the right thing. He was ill-advised, though, to use someone else’s name … and that was wrong.

The 12 member jury reached a unanimous decision that he should be paid the difference between what he received as a fire engineer, and what he would have received as a caption. The jury also awarded him $60,000 in punitive damages and lost wages from the time of his suspension.

The San Diego Union-Tribune

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Oregon state police fumbles emergency radio network, costs misrepresented to lawmakers by over $150 million

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A much needed emergency communications project, directly under the supervision of Oregon Gov. Ted Kulongoski, is reportedly two years behind schedule and more than $150 million over budget due to optimistic and purposely misleading information that managers provided legislators, in order to maintain support for the project’s outsized budget.

Thus far only $24 million has been spent, but the project’s costs have risen from the original estimate of $414 million to nearly $600 million, and state officials aren’t even sure if that’s a realistic figure. One of the largest construction and technology projects ever managed by the state, the state officials now believe that they were sold a bill of goods by project management who were in over their heads from the start.

Oregon lawmakers feel misled over the emergency radio network known as OWIN. Costs are now estimated to be more than $150 million more than they agreed to in 2007.

An investigative report published by The Oregonian details the seemingly fabricated estimates, lack of cost documentation, overly optimistic expectations, and lack of attention to planning on a complex system that’s long overdue for replacement.

A new system is needed to replace one that’s antiquated, preventing safety employees in different departments from communicating with each other. Existing equipment is so old and constantly breaking down that state workers regularly turn to eBay seeking replacement parts that distributors don’t even carry.

The proposed system, which includes a network of 300 microwave radio tower throughout the state, is called the Oregon Wireless Interoperability Network, or OWIN, for short. The objective is to put all public safety agencies on a single radio network so that they are able to communicate during emergencies. The present network requires safety workers carry several radios with them so that they can communicate with other departments when the need arises.

A new network had been hold for years simply due to cost projections. In 2007, the then-estimate for the system was $665 million, an amount that lawmakers turned down as being far too expensive.

In order to make the network a reality, in Nov. 2007, Gov. Kulongoski turned to former Oregon state trooper Lindsay Ball, a state employee with a reputation of being a successful administrator, to be the point person on the project and get it done for an acceptable price.

Ball had previously run the state’s Department of Fish and Wildlife and was credited with turning around the troubled department. From there, he was promoted to run the state’s department of Administrative Services in 2006.The project would be managed through the State Police Department, although Ball would report directly to the governor

By Sep. 2008, Ball had managed to convinced legislators to begin funding for the project, largely based on his representations that he was able to reduce total project costs down to $414 million. The alleged manner in which Ball was able to make over $250 million disappear from the budget included signing up local agencies to share in the cost, use state employees to handle a large portion of the work, redesign the network with fewer towers and less expensive radios and obtaining grants from the federal government.

At least that’s what was represented to lawmakers at the time, in order for them to give Ball the go-ahead on the project.

Two years later sources, including state auditors, say that most of the information provided to lawmakers was optimistic or purposely misleading estimates,  and that supporting documentation was either never prepared, or cannot be located. Significant savings from the original $665 million cost estimate, such as $77 million in operating cost for the completed system, were simply left out of the revised system costs.

In fact, most of the scheduled savings have not materialized, making the $414 cost estimate little more than a sham to get lawmakers to pull the trigger on starting to build the system. Earlier this year, management of the system was taken from the state police, and handed off to Oregon’s Department of Transportation. On Aug.1, Lindsay Ball retired.

Over the last several months, employees in ODOT have been unable to verify any of the claimed cost savings and say that the true cost of the system is roughly what had been estimated several years ago. Repeated requests to the state police department by The Oregonian for documentation of the claimed cost savings have not been addressed.

In order to get the project moving along on a faster track before the state legislature meets in January, project officials have now hired at least a dozen private consultants at a cost of up to $300,000 each per year, something they said they would never do at the project’s outset.

“It’s by far — by far — the most egregious case of the Legislature being misled by a state agency that I’ve ever seen,” said Sen. Betsy Johnson, D-Scappoose, who has watched the project for years.

Incoming Gov. John Kitzhaber is now faced with realistic estimates that the final cost will exceed amounts previously unacceptable to lawmakers, in an environment in which lawmakers are struggling to close a projected budget gap of $3.5 billion. Kitzhaber will have to make a tough decision on whether to scrap the out-of-control project, or move forward, hoping for the best.

The Oregonian

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Pittsburgh firefighters sue city to protect its pension benefits

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Terrified that the City of Pittsburgh might slip into insolvency and be unable to pay full retirement benefits, the firefighters union filed a lawsuit aimed at preventing the state from taking over management of its pension plan.

As it stands, Pa. officials are set to take control of the pension fund if it is not at least 50 percent funded by Dec. 31. Currently, the plan is only 27.5 percent funded. Under a state law passed last year, the Pennsylvania Municipal Retirement System would manage the fund and require the city to make much larger annual payments to the fund in order to achieve certain minimal levels.

The city paid about $56 million into the firefighters retirement fund this year. If the state takes over the fund, it’s estimated that the city would be required by the state to dramatically increase payments, reaching $91 million by 2015, and averaging $120 million for the next 30 years. City officials and union leaders fear that the new payment obligation would render the city insolvent.

If the city becomes insolvent, the firefighters collective bargaining agreement could be thrown out and its retirement benefits likely reduced.

The union said that city leaders should raise taxes if necessary to head off the takeover of the retirement fund by the state. Doing so would allow the city to sell tax-anticipation notes, and offset the fund deficiency.

Pittsburgh currently employs 625 firefighters, and is paying retirement benefits to 1,340 individuals, including retirees and widows.

Pittsburgh Post-Gazette

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Dallas Settles another Sex Harassment Suit with Firefighters

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The Dallas City Council has agreed to pay two female firefighters, Cheryl Hill and Sherrie Lopez, a total of $225,000 to settle their lawsuits. The women had filed suits for sexual harassment in September- and in Lopez’s case, racial discrimination- while working as Fire-Rescue employees.

The city settled another sexual harassment case in June for $30,000, within the same Fire-Rescue department. Still pending in federal court is yet another sexual harassment lawsuit, filed by former employee Leanne Siri-Edwards, once the highest ranking female civilian in the department.

The Dallas Morning News

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