The détente between the city of New Orleans and its firefighters started teetering during a Louisiana Senate committee hearing Monday over what a clause in the deal actually means.
Three of the four bills in the legislative package that tweaks firefighters’ retirement benefits marched through the Senate Retirement Committee with little discussion and no opposition. The full Senate could vote on those three House-passed bills later this week.
But consensus broke down on the fourth bill over the interpretation of a phrase that could decide whether about 60 employees could still access a benefit that will be made unavailable to new hires.
The overall deal is designed to end almost 40 years of bickering between firefighters and various city administrations about back pay and the pension system. The four-bill package is the culmination of that pact.
“The problem is everybody is not happy right now,” said Rep. Walt Leger III, the New Orleans Democrat who sponsored the legislative package.
Union officials withdrew their support for House Bill 58 after the Senate committee adopted an amendment pushed by New Orleans Mayor Mitch Landrieu’s administration.
The city says everyone agreed back in October that all employees, not just those hired since Jan. 1, would be unable to take advantage of both the Deferred Retirement Option Plan and the Partial Lump-Sum Option Payment Account. They could choose one or the other.
“There’s an agreement. We’re trying to live by that agreement,” said Andy Kopplin, the city’s first deputy mayor and chief administrative officer.
Nick Felton, who heads the firefighters’ union, said the union would never have agreed to cut back existing benefits for firefighters already in the system.
“We always opposed that,” Felton said after the hearing. “This is yet another vicious attack on firefighters by the administration.”
Felton said he would work to strip off the Landrieu amendment when HB58 gets to the Senate floor so that firefighters already in DROP would have the option of also participating in PLOP.
Generally, the Deferred Retirement Option Plan is used by employees who have reached the top of their grade and don’t think they’ll see any more significant promotions. Choosing DROP locks in the calculation for monthly payments the retirees will receive for the rest of lives.
Many government agencies offer this option for retirees. New Orleans firefighters can elect to start receiving their retirement benefits while still working. While finishing out their last five years on the job — and continuing to collect pay check — the pension dollars are put into a bank account.
The Partial Lump-Sum Option Payment Account, called PLOP, allows a firefighter on his last day of work to choose a lump-sum payment taken from his retirement account. Doing so would decrease the monthly benefit, but some retirees want to pay off their remaining bills, like a home mortgage, and are willing to live more modestly.
The problem is that pension system, which is only 12 percent funded, has to write a check immediately. No other government retirement system offers pensioners access to both of the programs, Kopplin said.
Union officials point out that should the retiree live for more than 11 years, the pension fund makes money on the deal. Felton said about 60 firefighters are currently in DROP. Based on past experience, he calculated, probably 15 to 20 of them would choose to also go into PLOP.
“It’s an intentional redrafting to eliminate the possibility of grandfathering,” Louis Robein, attorney for the New Orleans Fire Fighters Pension Relief Fund, said of the amendment.
Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport, asked the parties to continue working on a compromise as the bill heads to the full Senate. Postponing the legislation in committee to work out the disagreement is tantamount to killing it with only two weeks left in the legislative session.
The committee voted 4-1 to advance the bill on that basis. The sole Democrat on the committee at the time, Shreveport Sen. John Milkovich, voted against moving the legislation to the Senate floor.
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