Prepared to vote on pension reform, Atlanta City Council members on Thursday abandoned the latest plan in favor of a fifth option, and delayed taking any formal action until next week.
Council members compromised by combining elements of the two plans and giving city workers more concessions, which, according to actuary estimates, would still save the city around $25 million per year.
The council voted unanimously to amend a pension reform plan authored by Councilwoman Yolanda Adrean with revisions from Councilwoman Felicia Moore, possibly setting up easy passage next week.
“Today’s vote shows that local government leaders can work together to solve tough fiscal problems while not breaking faith with public employees, many of whom have risked their lives and provided years of dedicated service to Atlanta,” Atlanta Mayor Kasim Reed said.
Even with the delay, Atlanta remains at the forefront of several cities, and states, attempting to revamp employee retirement benefits with a landmark plan. Atlanta was pushed into action once it was faced with a huge, unfunded pension liability that had the potential to skyrocket.
The city has a $1.5 billion pension liability that is eating up 20 percent of its annual budget. Left unchecked, that liability could grow to $4.5 billion in a decade.
Shawn Frazier, who has worked for the city for 18 years, most recently in the Department of Watershed Management, was not enthusiastic about the plan, but was resigned to it.
“It is a compromise that I will have to deal with,” said Frazier, who took three vacation days to testify at public meetings against pension changes. “We have not had a raise in 10 years and they expect me to come do my job and be on time, which I do 110 percent. I expect them to do the same.”
The new plan would allow employees to contribute an extra 5 percent of their salaries to keep their existing benefits with no other changes. The contribution increases to 13 percent for workers with beneficiaries or 12 percent for those without.
Actuaries for Segal Company testified Thursday that the new plan could save the city as much as $215 million over the next 10 years, which was significantly more than the other proposals.
“We have an acute problem now,” said Eric Atwater of Segal Company. “This plan allows the city to save the most money over the next 10 years.”
Gina Pagnotta, president of the city’s Professional Association of City Employees, called the compromise a success, though workers will need to make increased pension payments in November. Pagnotta estimated that she would pay an extra $54 per pay period.
“This is 100 percent proactive, positive, innovative, enegetic and, for the employees sake, redemptive,” Pagnotta said. “This is a pivotal change, because we were all able to sit at the table as a collective group and come up with a solution that wins for everybody.”
Adrean’s plan would have combined a traditional pension plan that promised reduced benefits with a retirement plan comparable to a 401(k) that would shift more risk to employees. City savings were projected at $20 million annually.
In the end, Adrean, even with the support of Mayor Kasim Reed, couldn’t find enough votes for her pension reform plan, which was among four others offered.
“This compromise is a serious change; I look at it as a glass half full,” Adrean said. “But, most importantly, it moves reform forward.”
Council President Ceasar Mitchell said the new option has to be vetted, legislation has to be drafted and a consensus has to be found before the council can vote. A vote on Thursday wasn’t possible with those barriers.
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