An end-of-year deadline for Chattanooga’s pension task force was extended Tuesday, but the direction deliberations are going is still a big question mark.
"This is challenging work, and while members have not yet reached a consensus, they have made considerable progress," wrote Vijay Kapoor, director of workforce consulting at Public Financial Management Inc., in a request to extend the deadline to Feb. 6.
Six weeks have passed since the last public meeting, and with the holidays approaching, little time would have remained for task force members to submit a proposal to the mayor. Nor are they close to doing so.
Since October, they have attended weekly, private meetings to discuss cuts to the public safety pension plan. They have looked at a variety of changes for the fund’s actuary to review, so they can better understand how different components affect the plan’s financial outlook, according to Travis McDonough, the mayor’s chief of staff and task force chair.
For example, one change might look at the effect on the city’s contribution to the fund if the cost-of-living adjustment is reduced. Another might look at increases in employees’ contributions.
A single change can drastically impact the fund’s outlook, making it difficult to compare them all on the same continuum, McDonough said.
"The big picture is that the task force continues to look at ways to change some of the most important variables that determine the cost to taxpayers," he said.
A lot of ideas have been floated, but no hard proposals have been announced. Meanwhile, uncertainty is driving increased speculation in the city’s fire and police departments.
Frank Hamilton, pension fund administrator, said he receives calls almost daily from firefighters and police officers. They are worried about the decisions the task force will make, that their retirement benefits could be less than what they were promised.
"There are so many rumors flying around," he said. "And we don’t know what’s coming out of the task force. There is quite a bit of anxiety over the plan itself and how the benefits might change."
"We try to encourage everybody to wait and see what comes out of the task force before they make a retirement decision," he said.
Hamilton has attended some of the private meetings with task force members but is unclear on where the pension fund is heading.
"Pension plans are as much a personnel tool as they are a retirement tool," he said. "What we don’t know and have not had answered is what the current administration wants the departments to look like, how they want employees to behave."
During the last task force meeting, some employees criticized Mayor Andy Berke for keeping the pension task force at arm's length. Some suggested he already knows what proposal he wants the task force to make.
Speaking by phone Monday, Berke said the pension system’s 52 percent funded status necessitates changes. But he declined to name what those changes were when asked.
"We’re going through a pension task force process right now that will result in changes that will put us on the right track," he replied.
McDonough said the mayor has no preconceived notions about what specific changes should be made to the pension fund.
Against this backdrop, the majority of the police department’s command staff submitted their resignations this week, including Police Chief Bobby Dodd, Deputy Chief Tommy Kennedy and Assistant Chief Kirk Eidson. Assistant Chief Randy Dunn decided to retire a few weeks ago. Capt. Jeannie Snyder also plans to retire.
Dodd is on the task force, but it’s unclear what role, if any, potential cuts to the pension fund had on his or the command staff’s decisions. Dodd and Kennedy did not respond to messages Monday requesting comment. The police chief was three years away from qualifying for the deferred retirement option plan, or DROP, which would have been a significant retirement benefit, given his rank and salary of almost $127,000.
The exodus of top police officials comes on the heels of seven other high-ranking officers and firefighters who have retired this year. As of Tuesday, 41 firefighters and police officers have filled out paperwork to retire in 2013, Hamilton said. In a typical year, the pension board approves about 20 retirees.
So far, only two potential frameworks to change the pension fund have been made public. The first, proposed by the pension board in October, includes modest cuts to the retirement plan. The second, requested by Kapoor, would make deeper cuts, rolling back fire and police benefits closer to what they were at the turn of the century.
Actuarial analyses show the financial impact of each framework on city tax dollars. Chattanooga is expected to contribute $724 million to the pension fund over a 30-year period if the current benefits structure stays in place. The pension board’s proposal would save the city $126 million. The second scenario would save $400 million.
"We’re a lot closer than when we started, but we still have a lot of work to do to get to a consensus," McDonough said.
Listing off the mayor’s three priorities, Hamilton said: "We have the general parameters. The proposal that the board made does all of that. But absent any concrete parameters, we don’t really know what they want."
Whatever proposal the task force ultimately makes, the debate will continue into 2014. Any change to the pension fund must be approved by the pension board and the City Council.
If a proposal is blocked in either, the decision may go to voters in a referendum next year—an outcome Kapoor hopes doesn’t occur.
"There’s been a good faith effort by many of the task force members to figure out what the problem is and where do we go from here," he said. "I think they’ve made a fair deal of progress in a relatively short period of time."
"I would really encourage all the parties to come together to get a consensus, as opposed to going to a referendum and fighting this publicly," he said.
Updated @ 11:11 a.m. on 12/18/13 to correct a typographical error: Capt. Jeannie Snyder's name was originally spelled as "Jennie."
Sign up for our email list to get your morning news delivered directly to your inbox. All we need is your email address.