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RETIREE HEALTH INSURANCE MEETS THE KNIFE By Ronald J. York, President POLICEPAY.NET, Inc. 211 North Robinson, Suite
350 Oklahoma City, OK 73102 (405) 234-2235 www.policepay.net © POLICEPAY.NET, Inc. 2006 GASB-45
is about to descend on retiree health insurance. This new rule requires cities to report the
cost of fully pre-funding retiree health insurance. For most cities this means that the amount
reported will be about double the currently reported cost. The key thing to remember is that reporting
and paying are two different things.
Nothing requires any city to actually pay this additional amount. They must only show it in the annual
financial statements. However, this
has not stopped a stampede of local finance directors that are claiming that
it must actually be paid into some type of a trust plan. They are wrong. They know that they are wrong. But, when did being wrong ever stop people. Full funding of retiree insurance is the
new erotic and seductive fetish being pushed by the municipal finance people. Unfortunately,
most police unions are taking the Rhett Butler position – “Frankly my dear, I
don’t give a damn.” This too is not
hard to understand. If you are not
currently impacted by this, then why should you care? Most unions only have voting members that
are currently employed. Retirees have
no portfolio on these issues. Based on
the feedback I have received, most police unions are
not going to resist this impending, but irrational, funding plan. Okay,
where does this leave us? There are
five options for dealing with this loss of cash flow as a result of
pre-funding retiree insurance 1 - The city eats the entire amount (fat
chance of that happening) 2 - The contribution by the city for retiree
insurance is cut in half 3 - The benefits provided retirees are cut in
half 4 - Current employees eat the increase in the form
of reduced pay raises 5 - Current employees eat the increase in the
form of payroll deductions I
know, you pick door number 1, but you will be forced to choose between 2, 3,
4, and 5. If you want my guess, you
will settle for 2 or 3. Selling 4 and
5 will be impossible. There are two
more options - 6 and 7. 6 - Do not pre-fund retiree insurance (this
should be your goal) 7 - Eliminate retiree insurance (most cities
real goal) This
issue has elicited almost opposite reactions from cities and police unions. City finance directors are behaving like
evangelical zealots while police unions are consumed with apathy. I am surprised by the reactions of both
sides. When this rule was first
announced, I figured it was just another non-starter that would only be dealt
with by the geeky inner-circle of municipal auditors. I was wrong. When I discovered that municipal finance
directors were actually going to promote full funding, I assumed that there
would be a big uprising by police unions.
I was wrong again. Hey, I hear
you now. To avoid being caught in the
“three strikes and your out trap” I will drop the subject. For
those of you already retired, don’t be surprised to receive a letter saying
that your benefits have been cut in half or that your contribution is going
up dramatically. It did not have to be
like that but sometimes reality bites.
Ouch! Is Binding Arbitration
Ahead For Sheriff's Dept.? Nassau lawmakers are due to discuss
today whether to introduce a binding arbitration process for unionized members
of the Sheriff's Department a change firmly opposed by County Executive
Thomas Suozzi. But Suozzi,
who has long been on record against binding arbitration, reiterated that
position in a letter Friday to Presiding Officer Judy Jacobs of Woodbury. Some Criticize City Of
Dallas Police Pay Proposal From CBS News 11, June 6, 2006 The Dallas City Manager has come up with a
plan to raise police pay. But the proposal is drawing mixed reviews from
officers, with some even call it insulting. Middlebury Police
Ink New Deal Pact Includes
Pay Hikes, Possible Drug-Testing From the Republican-American, June 8, 2006 MIDDLEBURY -- A new contract for the Police Department includes a slightly higher co-pay on insurance, raises ranging from
3 percent to 3 1/2 percent annually through 2009 and, for the first time, the
option for drug testing. The contract was approved Monday. Police Commissioner Mark Brennan said Wednesday the four-year
contract is retroactive to July 1, 2005, when the previous contract expired.
Officers have been working without a contract since then. Brennan said the contract negotiations were characterized by a
"healthy dialogue." "I've negotiated a lot of contracts and these negotiations
were as cordial, respectful and productive as I've ever been involved
in," said Brennan, who is a partner in a lobbying firm. Officer Al Cronin, president of the police union, could not be
reached for comment Wednesday, but said in January that officers wouldn't be
looking for anything extraordinary in the new contract and would be satisfied
with the status quo. He said raises in the 3 percent range would be
acceptable. That's what the officers got, with a 3 percent raise in the
first year, a 3¼ percent raise in the second year, a 3½ percent raise in the
third year, and a 3½ percent raise in the fourth year of the contract, which
ends June 30, 2009. Cronin also said in January that the union would lobby for no
change in the cost of health insurance to the officers, which was 3 percent
of the premium cost. On that score, there was an increase from 3 percent to 5 percent
of the premium cost in the new contract for current employees. Officers hired after July 1, 2006, will pay 8 percent of the
premium cost. On the question of drug testing, Brennan said the commission can
require it of an officer if it has "a reasonable suspicion" the
officer is using drugs. He said there was "nothing confrontational" about the
provision and that it was not done for any particular purpose other than to
give the commission the option to take action if necessary. Brennan said the negotiations were held up as long as they were
because officers were trying to decide whether to affiliate with a different
union. In the end, the department stuck with the Connecticut Employee
Service Union. The union has represented the officers for more than 20 years,
since they first organized. Negotiations began Feb. 21 and concluded on May 16. The Police Commission agreed to a request by the union that
promotions for positions other than chief will be involve an outside agency. The agency will determine how candidates will be evaluated and
will provide the commission with several names to choose from. Brennan said the commission likely will begin negotiating the
next police contract in February 2009. Prince George’s Attempts To Keep Up Better starting salary for teachers, police a county priority From Gazette.net, June 8, 2006
But the boost in pay may not make much difference in the
regional competition for top teachers and police officers since surrounding
jurisdictions plan similar raises. The police department is offering similar incentives. In early
July, pay for entry-level officers will rise to $44,148 while veterans
officers get across-the-board raises. The starting officer salary today is $42,863, about average for
the region. Montgomery and Fairfax counties offer $40,386 and $42,631,
respectively, while the District of Columbia offers $44,611. ‘‘We want to make sure the salaries are very competitive,” Erzen said. But just when Prince George’s salaries go up, Montgomery will
raise its offer to $41,598 and Fairfax will raise its
to $44,443. In October, the Metropolitan Police Department in the District
plans to increase its offer to $46,395. Those moves put Prince George’s about where it was before: ahead
of Montgomery, about even with Fairfax and behind the District. Prince George’s, though, does not require police applicants to
have an associate’s degree, and offers a 20-year retirement plan, an
attractive benefit compared to the 25-year plan common in surrounding
jurisdictions. ‘‘This contract makes us very competitive with the other
agencies,” said police union president Percy Alston. Maj. Dan Dusseau, head of the police
department’s Criminal Investigations Division, said the increases will help
in the competition with other agencies. Johnson has said he wants to hire 200 officers a year in an
effort to keep up with the county’s growing population. The department
received 3,540 applications in the last six months of 2005. The intake slowed
slightly in the first quarter of this year, but the department still took in
1,019 applications. ‘‘If you want the cream of the crop, you’ve got to stay with the
Jones’,” Alston said. Paducah Withholding
Firefighter Raises Over Lawsuit PADUCAH, Ky. Paducah Firefighters' efforts to win back pay from
the city has cost them a raise. City commissioners granted a four percent raise last night to
all other union employees in the police and public works departments starting
July First. But they held back on the firefighters. Three of the five
commissioners said withholding the raises would offset the cost of fighting a
lawsuit by the firefighters -- as well as a potential multimillion dollar
judgment. The firefighters' union sued the city in January, claiming that
it has incorrectly calculated overtime pay for firefighters for years. The
suit seeks back pay over a period of up to 15 years. A commissioner who opposed denying firefighters a raise says the
raises and lawsuit were unrelated and shouldn't be grouped together. Mayor, Police Spar On Contract From the Gloucester County Times,
June 5, 2006 WASHINGTON TWP. -- Mayor Paul
Moriarty called a police union protest last month that included a giant
inflatable rat "embarrassing" and "unprofessional" and
said the township deserves an apology. "I should resign if I did
that," Moriarty said. "It would be wrong." Union officials showed no sign of
saying "sorry." "The union knows that the mayor
has total disrespect for public service and public safety employees,"
said Stuart Alterman, an attorney for Policeman's
Benevolent Association (PBA) Lodge No. 318. "Unfortunately, this mayor
has taken it upon himself to facilitate a course of conduct that has done
nothing but antagonize every township employee, their family and their
friends." Rank-and-file police officers have
been working without a new contract for the past six months, and negotiations
on a labor agreement have been ongoing since the fall of 2005. With talks
heading to arbitration, both sides are accusing the other of unnecessary
delays. The contract with public works
employees - represented by AFSCME Council 71 Local 3303A - has also expired. The mayor filed an unfair labor
practices claim against the police union in December, claiming officials
failed to discuss any of the dozen or so proposals floated by the
administration and refused to put any of its own proposals in writing. Moriarty speculated that "the
rank and file have not been informed by their leaders what's going on,"
arguing that the ball is in the union's court. In March, the union received
the full, phone-book-sized health plan proposed by the township for review,
but has yet to respond, according to Moriarty. "They owe us a phone call,"
Moriarty said. Paul Martin, president of the PBA
lodge, said union had requested the full health plan "for months upon
months" to no avail, he said. When it finally obtained the proposed
plan in what officials said was May, union members voted to hire an expert to
compare it to the officer's current plan and pinpoint the changes. "It's a voluminous amount of an information for an individual to sift through,
requiring hours and hours of evaluation," Alterman
said. "It's important to note that if we received the plan documents
last December or January, we would already have an opinion now." If there's anything both sides can
agree on, it's that health benefits is the major sticking point in
negotiations. "We have guys going out there
giving 150 percent, and they want to make sure they have the same benefit
level," Martin said. While Moriarty has declined to
discuss all the administration's proposals, one would include an increase in
the rates for prescription co-pays. Now $5, $15 and $30 depending on the drug
class, the mayor said that range would be increased to $10, $30 and $45 under
his proposal. Moriarty suggested such concessions
are not unreasonable, given the amount of sick and vacation time offered to
police officers, as well as payments based on advanced educational degrees
and the lack of payments officers are required to make when it comes to
health insurance premiums. "I think they have a pretty good
deal," Moriarty said. Martin said the union refuses to
blindly believe the changes to the co-pays would be the only revisions of
their health care plan, which is why the expert was brought on board. "The union has very little faith
in the mayor as far as his word," Martin said. Martin further noted that officers
are being stretched thinner as the township continues to mull increasing the
force from 85. Former Chief Charles Billingham had requested that the department be increased
to as many as 90 officers and current Chief Rafael Muniz has agreed the force
needs additional manpower. "You can't keep increasing the
workload on these people and telling them they don't deserve the benefits
they previously enjoyed," Martin said. Fed Up With Negotiations Failure? Are
you wondering why you are failing even though you are doing all the things
the "big boys" do or following the advice of the negotiations
"experts?" The answer is easy. They are wrong - plain and simple.
Alright,
that's "kickin' their butts." The only
problem is - it does not work. If it did, New York and Philadelphia
would be the highest paid departments in the country.
In
case you did not recognize this method, it is the trendy "interest
based" or "win-win" method. It is actually good stuff. The
only problem is that it usually fails for police associations. It is too
tempting for the city to "jump ship" and retreat to positional
bargaining after you "drop your pants." When you finally end up in
arbitration, the city has every document, idea and concept that you have, but
you have little or nothing from them. Under the "expert method,"
negotiations are nothing but a deposition of you by the city. |
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The POLICEPAY Journal
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by:
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Inc.
Oklahoma
City, OK 73102
(405)
234-2235