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Memphis City Unions Sue Over Pension Cuts; New Mayor Who Voted For Cuts As Councilman Will Have Chance to Undo Actions of Predecessor

Memphis City Unions Sue Over Pension Cuts; New Mayor Who Voted For Cuts As Councilman Will Have Chance to Undo Actions of Predecessor

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by   Samuel Morris               Godwin Morris Laurenzi Bloomfield

50 N. Front St., Memphis TN  38103

901 528 1702    901 949 1144

 

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Unions sue city over pension cuts

Credit: MIKE BROWN

November 12, 2015 - Memphis Police Association president Mike Williams is tapped on the shoulder as Memphis Fire Fighters Association president Thomas Malone looks on following a press conference on the steps of the Shelby County Courthouse. Five city of Memphis employee unions sued the city Thursday to stop the pension benefits of some employees being reduced July 1, 2016. (Mike Brown/The Commercial Appeal)

 

Posted: 2:20 p.m.


Five city of Memphis employee unions frustrated over benefits cuts sued the city Thursday to stop a reduction in the pension benefits for some employees from taking effect.

In front of the Shelby County Courthouse, flanked by statues of "Authority" and "Justice," union leaders said the Memphis City Council's Dec. 16, 2014 vote to cut benefits for employees hired since Jan. 1, 2009 violated the state constitution, the city's pension ordinance and the city's duty to pensioners.

Thomas Malone, president of the Memphis Fire Fighters Association, said the lawsuit "strikes an important blow" for employees, who are leaving the city en masse for other jobs because of the cuts. In the last four years, close to 300 firefighters left because of the cuts, union leaders said.

"We think once this lawsuit is settled, that we'll be able to recruit and retain our employees because they're getting what the deserve, what they signed on for," he said. "This is something that has been taken away from them, and we say it's illegal. That's why we're filing, and we'll have our day in court."

The lawsuit asks for an injunction to stop the city from moving newer employees from a defined benefit plan to a hybrid defined benefit and defined contribution plan July 1.

The lawsuit is the latest broadside in the unions' attempts to stop Memphis Mayor A C Wharton's administration from reducing benefits to help make up a $54 million gap between the $20 million the city was paying per year into its pension fund and the amount it needs to fully fund pensions -- $73.9 million in the fiscal year that ends June 30, 2016.

The state gave the city until 2020 to make up the annual funding gap, which the council narrowed to $27.4 million when it approved a $46.5 million contribution for the fiscal year that ends June 30, 2016.

City officials estimate the pension changes would free up $5 million to $6 million that could help fill the funding gap.

Also, the administration plans to stop subsidizing health insurance for retirees younger than 65 at the end of 2015, freeing up $10 million.

The unions have questioned the city's savings estimates, and said Thursday that the city hasn't exhausted all of the other cost-cutting options.

Jack Sammons, city chief administrative officer, declined to comment on the lawsuit, but said the administration made the cuts to secure a "future for a next generation."

"Managing a government is much like managing a family or a business," said Sammons, who joined the administration in May. "Sometimes the hard economy of finances forces you to make very difficult decisions."

The reduction of pension benefits would affect more than 1,000 police officers -- about half of the division -- and about 250 firefighters, union leaders said.

One of the firefighters who would be affected by the change is Stephen Zachar, 38, who was at the courthouse with his 5-year-old son and 3-year-old daughter. Zachar said he was hired three months after the Jan. 1, 2009, cutoff date.

"I have offers in other parts of the country that will give me the benefits I was promised when I raised my hand to volunteer to put my life on the line for the city," he said. "How is it my fault the city didn't put in year after year toward their obligation? Why is it coming off my back?"

Michael Williams, president of the Memphis Police Association, said the cuts have made the "second-most dangerous city in the nation" less safe.

As of July this year, 243 Memphis officers had resigned over the past four years, according to the police association.

"We owe it to the citizens of this city, with all of the things that are going on around the country, to provide them with the best quality individuals," he said.

The lawsuit claims the city violated the state constitution's guarantee of equal protection, that it breached the fiduciary duties owed to the current pension plan participants, and that it violated the city pension ordinance.


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50 N. Front St., Memphis TN  38103

901 528 1702    901 949 1144

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