• If the pension task force reaches a consensus at the December meeting, the Fire and Police Pension Board will then have to review the recommendation. If the pension board votes to approve cuts to employee benefits, the recommendation then goes to the mayor's office. The mayor will then take it to the City Council to pass an ordinance changing the benefits.
However, if the pension board rejects the task force's recommendation, it will go to a referendum vote next year.
With five weeks to go to meet the Chattanooga mayor's deadline, some members of a task force working to reform the city's fire and police pension plan aren't sure if they can come up with a solution in time.
And some officers and firefighters aren't willing to wait, officials say; several are retiring earlier than planned to avoid benefit reductions that could be coming.
Six firefighters and four police officers are retiring this month and December, five with fewer than the average 28 years of service, said Fire and Police Pension Fund Administrator Frank Hamilton. Calls are flooding the pension board from officers and firefighters who want to see how their numbers stack up to retire early.
"There's almost a feeling of hopelessness, even though we don't know what's going on," Hamilton said.
Mayor Andy Berke named the 18-member task force in August to find a way to reform benefits and curb a $150 million unfunded liability in the fire and police pension fund. The task force first met in September and has a Dec. 31 deadline to decide on a fix.
If there's no consensus, Berke would make a recommendation that would be put to a referendum vote next year, an option officials on both sides said they would like to avoid.
The board as a whole didn't meet this month but smaller groups privately met twice to discuss ideas on resolving the shortfall and continuing to retain and recruit quality employees. The ideas were presented to the board's actuary to calculate the expected savings.
Fire Lt. Terry Knowles and police Sgt. Phil McClain, both task force members, said they hope to meet the deadline but worry there hasn't been enough time to decide the future of their fellow officers and firefighters' pensions.
McClain, who is also on the Fire and Police Pension Board, aired his concerns at Thursday's regular board meeting.
"At best we'll have 40 hours to make decisions that will affect people for years and years to come. I just don't think it's fair," he said.
Travis McDonough, Berke's chief of staff, said he believes the task force has had sufficient time to find a solution. But if task force members show they are close to reaching an agreement by the end of the year, the mayor's office will consider extending the deadline.
"We don't want to rush anything," McDonough said. "We want to be deliberate. We want to give it all the time necessary to get it right."
Currently, Chattanooga police officers and firefighters can retire with more than two-thirds of their pay, plus health benefits, after 25 years of employment. The average policeman or firefighter retires at age 53, although many retire earlier. The average pension beneficiary is paid $37,524 and the pension includes a 3 percent cost-of-living increase every year.
The pension board already has recommended changes, such as a minimum retirement age of 50, raising employees' contributions to the fund by 1 percent and reducing cost-of-living adjustments. The cuts are estimated to save the city $126 million over the next 25 years.
McClain said those options are still on the table but the task force is considering more changes. The task force hasn't openly discussed what's being considered.
Knowles said he and other task force members don't know how much savings the mayor would like to see and he has asked that question without receiving an answer.
McDonough said the city doesn't have a hard-and-fast savings target.
A central issue is the city's deferred retirement option program, or DROP, which was instituted in 1999 to encourage officers and firefighters to retire with less than 30 years' service.
This plan gives the employee his or her retirement benefits from the last three years of work in a lump sum. In return, the employee takes a 3 percent reduction in pension payments.
As an example, an employee who earns the average salary of $44,786 and decides to work past 25 years has two options: Retire with a 28-year pension benefit of $32,650 annually, or go out with a 25-year pension benefit of $30,790 annually and take the accrued pension benefit for the three extra years in a lump-sum payment of $92,376.
Pension board members say the DROP isn't a bonus because it's not additional compensation.
At the last task force meeting the city's consulting firm, the PFM Group, spent a significant part of the two-hour talk studying the DROP. The plan has paid out a total of 316 payments totaling $31.4 million.
Hamilton said this has led some firefighters and police officers to believe the DROP might be on the table to cut, and he thinks it's driving them to want to leave early.
Pension board members say the DROP was changed in 2008 to reduce and ultimately eliminate the guaranteed interest credit. Now, they say, the new plan is moving toward becoming cost neutral.
But McDonough said the task force has been trying to figure out how much the DROP actually costs the city. He believes the calculated cost will be discussed at the next task force meeting, which should be set for the first half of December.
When asked whether more information will be given out to quiet the unrest within the departments, McDonough said he thinks the process of reaching an agreement has been beneficial.
"I think a few months ago there was a little bit of an information vacuum before this process started," he said. "Now they know a whole lot more of the reality of the situation."
Last year, 32 officers and firefighters retired, which would be an average of 2.5 a month.
Now there are about 80 officers and firefighters who have 25 years of service and potentially could retire. And Hamilton said he's been encouraging employees who call to wait and see what the task force proposes.
"Don't make a decision based on what you think might come out of the task force," Hamilton has told them. "Wait and see what happens."
Contact staff writer Joy Lukachick at firstname.lastname@example.org or 423-757-6659.
Joy Lukachick is the city government reporter for the Chattanooga Times Free Press Since 2009, she's covered breaking news, high-profile trials, stories of lost lives and of regained hope and done investigative work. Raised near the Bayou, Joy’s hometown is along the outskirts of Baton Rouge, La. She has a bachelor’s degree in mass communication from Louisiana State University. While at LSU, Joy was a staff writer for the Daily Reveille. When Joy isn't chasing ...
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