The more difficult parts of retirement reform talks Wednesday were like buying a car.
One side made an offer. Brief discussion between the two. Then longer delays as each side huddled to craft a counter offer.
The pattern was repeated several times during more than four hours of discussion between the city and Police and Fire Pension Fund.
The latest round had fund administrator John Keane up first, offering an amended version of his “shared sacrifice” plan. Similar to Tuesday’s offer, it called for current employees to still gradually contribute more to their retirements.
The fund also would pay additional chapter funds each year, with the extra percentage depending on the plan’s funded status. How much extra would depend on how funded the plan is, instead of being tied to specific years as was previously offered. For instance, the fund would put in an additional 4 percent until the plan was 50 percent funded. The percentage would drop until the plan reached 80 percent funded, which equates to a “healthy” plan.
To do that, current employee benefits like cost-of-living adjustments and returns for the Deferred Retirement Option Program would not be changed.
Adjusting those benefits has been the largest point of contention between the two sides in the past couple of days.
Chris Hand, Mayor Alvin Brown’s chief of staff, responded that he thought the fund refusing to yield on those benefits would present “real challenges” in making progress.
“Guys, this is where it gets harder,” said moderator Rod Smith, a former state
senator and state attorney.
He called for a 15-minute break, which turned into an hour.
Smith talked with both sides during the break and had a proposal that adjusted both benefits for current employees but would have the city agreeing to other parts of Keane’s revised plan.
Finally, Smith saw the two sides agree on something.
“Neither one of you likes it,” he said.
Another recess, with the sides reviewing Smith’s proposal.
Back at the table, the city had an offer. It would relent some on the cost-of-living adjustment cap, increasing it slightly. The city wasn’t budging on its DROP plan that would set a floor of 0 percent and ceiling of 10 percent for rates of return for those in the program.
Keane had a proposal of his own, one with a new wrinkle: The fund would contribute about $100 million over the next few years, meaning the city wouldn’t have to pay as much into the plan.
Most of it would be the immediate $61 million deposit from two fund accounts, one dealing with enhanced benefits, the other a “city stabilization account” that’s collected funds from the city over time. The remaining $37 million or so would gradually be contributed through chapter funds, which are insurance premium funds public safety personnel pay each year at a rate of about 4 percent.
But, current employee benefits would remain unchanged.
Smith then called a 15-minute break for the sides to talk about the proposal.
Nearly an hour later, Brown and the city’s team filed back in with a counter.
It wanted the money. But it also wanted to implement the cost-of-living change and was now willing to offer a higher floor — from 0 percent to 2.5 percent — for DROP. And it would contribute an additional $40 million each year until the plan was 80 percent funded, if the fund gave up half of those chapter funds annually to do the same.
It also would allow the fund to make additional types of investment, which Keane has long sought.
At close to 6 p.m., though, it was time to call it a day.
Both sides said progress was made, but will head back to the table at 1:30 p.m. today in what’s scheduled to be the final day of talks.
If an agreement can’t be reached and impasse is determined, the City Council will make the final decisions.