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Pensions Financial Reform: Council wants collaborative pension agreement
CINCINNATI (Jeff Hirsh) -- Thousands of people who used to work for the city of Cincinnati, those who work there now, or will work there in the future, will likely see their retirement benefits cut.
That's the bottom line of a measure unanimously approved Monday by city council's budget committee. In order to prevent the pension shortfall from eating up everything in the city budget, police, fire, snow removal (You name it) the city is hoping to work out the same kind of agreement which we saw after the riots.
After the 2001 riots, the city and civil rights groups, under the supervision of a federal judge, negotiated what's called the collaborative agreement. That agreement was about changing police procedures and improving police community relations. Now, city council is hoping for a different collaborative agreement, to hold off financial disaster.
Seven thousand current employees and retirees are covered by the Cincinnati Pension Fund, which has an 860 million dollar shortfall. Monday, council's budget committee okayed negotiating a collaborative agreement with those retirees and current workers; cutting retirement benefits in return for stabilizing the pension fund long term.
"The last eight years of the previous administration failed the pension system in the city. The last eight years we saw the unfunded liability tick up," Christopher Smitherman of City Council said.
But after the political wrangling, council members agreed to what a retiree urged, and unanimously approved efforts to negotiate a pension deal.
"It does no good to point fingers and talk about blame. The past is over. Let's pick up what's left and make the most of it," Smitherman said.
As part of the negotiated deal, the city wants to reduce retirees cost of living increases. But the AFSCME union is not necessarily going to agree with each and every cut the city wants. Union President Pete McLinden told me the city has not fulfilled certain promises on other issues so they will negotiate, but they won't roll over.
The talks, supervised by federal Judge Mike Barrett, could take up to a year. A big reason for the timing of Monday's vote deals with the city's credit rating. Representatives of the two firms which issue those ratings will be in Cincinnati later this week, going over the books.
Council members hope the pension vote is a signal the city is serious about reducing the pension shortfall and will prevent a downgrading of the city's debt rating.
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