What Happened?
City Council in Melbourne, FL, approved changes to its police pension plan that will require the department’s officers to increase their retirement contributions. The move will save the city about $400,000 in pension costs.
So What?
About 100 miles south of Melbourne, Palm Beach Gardens also took on the task of reducing police pension costs last summer when city officials said about 12 percent of all city funding was dedicated to paying pension costs. Many of the same changes made to Melbourne’s pension were first made in Palm Beach Gardens. Sarasota, FL, also is proposing similar changes to its police pension plan.
The Goals and Process
The pension for the 170 officers in the department allows them to retire at 75 percent of their final salary after 25 years of service. Those parameters don’t change. But now pension benefits can’t go higher than $90,000, similar to the new policy in Palm Beach Gardens. In Melbourne, an existing officer now can’t use more than 200 hours of overtime for pension calculations and a new officer can’t use more than 150. The biggest change is individual contributions. Officers formerly had to contribute 5 percent of their weekly pay toward their pension, but existing officers must now contribute 6.5 percent of their paycheck. New officers -- ones hired after the new policy took effect after Council’s Nov. 27 decision -- will have to pay 8 percent. With a starting salary of $37,339.90, an officer hired next year would contribute about $1,120 more a year that he would have this year. An existing officer making $50,000 would have contributed $2,500 to the pension plan this year, but will contribute $3,250 next year. Over a 25-year career, that’s an extra $18,750.
The Findings
While cops will be paying more, taxpayers will pay less -- or at least won’t be paying for pension increases. The city said it expects to save about $400,000 on the changes. The approved plan is a variation of an earlier version Council floated, but the cops wouldn’t agree to. There was an impasse hearing scheduled for November that was canceled when the officers voted 105-2 to agree to the now-approved version. If an impasse hearing would have been scheduled, it would have been the second time in eight months the city and its police union would have been at an impasse.
Research
Recently, North Haven, CT’s moved to a 401k for its police department. Because the state of Connecticut allows individual cities and towns to negotiate with unions within collective bargaining, significant progress has been made by many communities. Fairfield and Thomaston have also passed similar agreements. Does your state allow your city or town to bargain directly with unions on pensions? If so, send us a note: bgreenfield@efficientgov.com.