D.C. Councilman Marion Barry (D-Ward 8) and other city legislators are opposing a contentious pension reform bill, which would affect teachers, police officers and firefighters, if passed. Members declared that the bill will face an impasse as a majority of the D.C. Council opposes the legislation.
Introduced by Councilman David Catania (I-At-Large), the pension reform bill, would amend benefits and place tighter restrictions on retirement benefits eligibility for current employees and retirees. Catania called proposed provisions “modest changes,” which are necessary to ensure the “viability” of D.C.’s pension system.
“Around the country, states are grappling with unfunded pension liabilities due to the lavish promises made to employees during better years,” Catania stated on his website, davidcatania.com. “This legislation will bring the District’s pension system in line with the best practices of many other jurisdictions.”
Among other changes, the bill would adopt the New York model, in which cost-of-living adjustments are tied to 50 percent of the consumer price index, with a floor of 1 percent and a ceiling of 3 percent; and increase the retirement age to 67. Additionally, overtime earnings, bonus pay and vacation time would be excluded when benefits are calculated to avoid “spiking” and “pension padding,” according to Catania.
Since 1997, D.C. has been responsible for pension benefits – anyone who was hired before that year receives their pensions from the federal government.
Yesim Yilmaz, the director of fiscal and legislative analysis for the D.C. Office of Revenue Analysis, testified at a hearing on April 4 that by 2012, the city could generate $52.6 million if the full retirement age changed to 67 years old.
But some leaders said those savings could not mitigate the ill-treatment of public servants. Promises were made to those who receive pensions, Chief Cathy Lanier and Acting Fire Chief Kenneth Ellerbe said at the hearing. They also said that the bill would discourage future applicants.
Edward Smith, president of the Fire Fighters Association (Local 36), who attended the press conference and testified at the hearing, said his organization opposes any alteration of the pension system. He challenged statements made in the pension reform bill at the hearing, including Catania’s claim that the legislation would provide for an actuarial audit by an outside consultant.
“This is already required. Any change in benefits automatically requires an actuarial study be conducted to see the impact of the fund,” Smith said – and the revenue analysis office agreed.
“ already conducts a quadrennial actuarial audit. The last audit was done by Gabriel, Roeder, Smith and Co. in June 2008, and the next one is planned for the summer of 2012,” Yilmaz said. “The costs of these studies are paid out of the Retirement Trust Fund.”
Smith said contrary to what supporters of the bill think, the pension system has not significantly impacted the city. “It’s not a huge drain on the taxpayer,” Smith said. “It’s a small portion of the local revenue.”
Councilmember Mary Cheh (D-Ward 3) chairs the Government Operations Committee, which determines the passage of the bill. She said the measure will “certainly” not be in the Budget Support Act but that it may have some merit.
“My instinct is that maybe there is a need for reform, but it has to be respect so it’s not to affect people who are working or counting on a set of expectations for their retirement.”