Task Force Proposal
The plan requires approval from the pension board and the City Council. Here are the key details.
• Minimum retirement age for non-vested members 50, new hires 55
• Employee contribution to go up from 8% to 11%, or 9% to 12% over the next 3 years
• Cost of living adjustments for retirees at an average of 1.5%
• The DROP will no longer include interest, and employees will have the option to stay 3 extra years without losing the benefit.
• Increases benefits to 100% for beneficiaries of those killed in the line of duty
After months of debate over where to cut the pensions of Chattanooga police and firefighters, union leaders and officials arrived at Wednesday morning's negotiations prepared for the worst.
It was day two of face-to-face meetings with Chattanooga Mayor Andy Berke's Pension Task Force.
Union leaders and the rank and file had seen the turmoil the talks had already created. Berke had announced formation of the task force during the summer, and the year had closed with twice the average number of officers and firefighters retiring and the police chief and all but one member of his senior staff joining them. Union leaders had also seen other local systems like Erlanger hospital announce plans to move from a pension to a 401(k)-style retirement plan.
With that in mind, union leaders and Fire and Police Pension Board members had drawn their lines in the sand, the areas where they were not willing to sacrifice even if that meant going to a referendum vote. That was considered a risky move that would have pitted law enforcement against City Hall and yielded the decision to voters.
"That was the nuclear option," said Sgt. Toby Hewitt, Fraternal Order of Police chapter president. "We didn't want to, but we weren't afraid of it."
The hardest of the hard lines was refusing to force officers and firefighters with 10 or more years vested in the retirement plan to have to work past their promised 25 years before they could retire. Next was making sure that employees kept the DROP, the option to take their last three years of pay after 25 years in a lump sum, about $100,000 per person.
The administration had its plans too. Officials wanted to save significant money for the city but still come away with a sustainable pension plan that would attract and keep a quality workforce.
Yet so far every proposal from the task force had been met with that's not good enough, from one side or the other.
So in one room Wednesday sat law enforcement. In another, the business leaders and civilians who also made up the mayor's pension task force, along with key members of the Berke administration. Chief of Staff Travis McDonough kept the mayor informed by phone.
The city's consultant, Vijay Kapoor, shuttled back and forth between the two rooms, acting as a mediator.
Emotions ran high. Ideas were exchanged. So were shouts.
Several times within the 13-hour meeting, union leaders got up to leave.
Berke announced in July that he would appoint a task force to recommend how to rein in the city's $150 million unfunded liability to the Fire and Police Pension fund.
Things got off to a rocky start when Berke's staff pushed union leaders to sign a prewritten letter in support of the mayor's task force and critical of the Fire and Police Pension Board. Meanwhile, pension board members said Berke was portraying the city's financial situation as more serious than it was.
After three public meetings, the task force working group, made up of union leaders and business leaders, met behind closed doors. A proposal that emerged in December sparked fear in the fire and police ranks, with some saying the plan would gut their pensions and spark a mass exodus from both departments.
The plan would have raised employees' pension contributions by 40 percent or more and set the retirement age for new hires to 58 and for other employees to 50. The plan would have also ended the DROP for new hires and frozen the cost-of-living allowance for two years.
Kapoor later said the proposal was never a serious plan and that he withdrew his request to have the figures analyzed to see what its impact would be.
For the unions, that proposal became a rallying point.
Several union leaders said that plan caused them to unite and to pinpoint where they would not compromise.
They also said that the battle to reach a consensus that Berke would accept weighed heavily on them. Not only did their own futures hang in the balance, but they were fighting for their fellow officers and firefighters as well.
For Jack Thompson, president of the Chattanooga Fire Fighters Association Local 820, the decision would affect everyone closest to him. His two brothers are also firefighters, and his father was a fire captain who retired after 30 years in the department.
On Wednesday, with tempers high but the stakes even higher, union leaders decided to stay.
They argued that a plan they had finalized a few days before should stay intact. Several union leaders said they pressed the administration to tell them how much savings was needed.
They said they eventually compromised on employee contributions, which will rise by as much as 37 percent over three years.
In turn, the administration agreed to protect employees who have at least 10 years' vesting in the retirement system and not take away the promise that they could retire after 25 years of service.
The breakthrough came in the final hour after several law enforcement officers put on their coats to leave, but were called back to the table.
Leaders called the eventual agreement a win for their members, hanging onto the benefits that mattered most to them.
"Our final proposal was overwhelmingly what we went with," Thompson said, referring to the plan that had been drawn up days before at the pension board office. "This is what we wanted."
One official, who asked for anonymity because he wasn't authorized to speak, said he believed law enforcement gained leverage when Police Chief Bobby Dodd and all but one of his command staff retired on Dec. 31.
"It made for a better bargaining situation," he said.
Berke said both sides compromised and that he listened to what the unions wanted.
Thursday afternoon, Berke announced he would accept the pension proposal that is expected to reduce the city's annual contribution to the fire and police pension fund by $4 million to $5 million a year and save the city $200 million over 26 years. The announcement was made from FOP headquarters with union leaders standing with the mayor.
"These individuals have recognized [that] for their members to actually receive the benefits, something has to be done, and we've come to a resolution that I think puts the balances in the right place," Berke told the media.
In the end, Berke said in an interview with the Times Free Press, he heard the leaders and decided not to get rid of the DROP, and to increase benefits for elderly widows.
"I've been through a lot of negotiations. I've heard people threaten to walk out a million times," Berke said.
"That's part of the process. It's frustrating, it's difficult, it's personal. I understand that. I never once told anyone that they shouldn't be upset."
Contact staff writer Joy Lukachick at firstname.lastname@example.org or 423-757-6659.