In The News › N.O. firefighter pension fund worries La. Sen. committee as it passes compromise package of changes

N.O. firefighter pension fund worries La. Sen. committee as it passes compromise package of changes

By Jeff Adelson, Nola.com / The Times-Picayune
May 20, 2013

Lawmakers described a compromise aimed at putting the troubled New Orleans Firefighters Pension and Relief Fund on surer financial footing as a small step for a program they argued needs a full overhaul, during a committee hearing Monday. The package of bills changing the makeup of the system’s board and requiring firefighters to put in higher contributions for fewer benefits passed the Senate Retirement Committee.

The legislative package now heads to a final vote before the full Senate, though in a much less ambitious form that first pushed by New Orleans Mayor Mitch Landrieu’s administration. That plan, which would have given the city complete control of the pension fund, were tamped down earlier this month when the House Retirement Committee decided on a compromise plan between the administration and firefighters.

That plan passed the House last week.

But in presenting the plan to the Senate committee, New Orleans Chief Administrative Office Andy Kopplin argued that the bills did not go far enough. “I don’t believe they come close to solving the problems with this fund,” Kopplin said. “A lot more changes are needed.”

The pension system has long been a financial albatross for the city, a situation that firefighters and the administration have tried to lay at one another’s feet. Administration officials have accused the board, now controlled by current and former firefighters, of mismanagement and have argued that generous cost-of-living adjustments wreaked havoc on the fund. On the other side, firefighters have argued that decades of the city’s underfunding of the system and an ill-fated scheme to invest bond proceeds in the stock market just before its collapse are to blame.

Maintaining the fund now costs the city about 10 percent of its general fund revenues each year, a situation that Sen. Conrad Appel, R-Metarie, said is unsustainable. Appel, who represents parts of New Orleans, asked how he was supposed to explain to his constituents in New Orleans the “absurdity that we’re even having these kinds of situations.”

“We need a strategy to get this off the table and get this all paid off,” Appel said.

New Orleans Firefighters Association President Nick Felton said his members are ready to negotiate at any time. “I believe we can get more done by talking,” Felton said.

The package headed to the Senate, largely crafted by New Orleans Democrat Rep. Jeff Arnold, makes tweaks to the fund’s board that are much less dramatic than those sought by the Landrieu administration and others, including the Bureau of Governmental Research, a nonpartisan think tank. Both those groups have argued for putting the fund under the city’s control, something Arnold has argued would allow city officials to control both sides of the debate over how much New Orleans owes to the fund.

Under the plan, the board of the system would shrink to seven members, four drawn from the ranks of current or retired firefighters and three appointed by the mayor. But acknowledging the concerns of the administration, it would take a two-thirds majority for that board to grant benefit increases.

The measures would also require the roughly 700 active firefighters to contribute 10 percent of their pay toward funding the system. That’s an increase of four percentage points for those with less than 20 years of experience. Those with more than 20 years in the system now pay nothing.

Those increases would be phased in over the course of two years for those with less than 20 years with the agency and three years for those with more experience.

Arnold has said he would fight any changes to the package that both sides couldn’t agree to.

House Retirement Committee Chairman Rep. Kevin Pearson, R-Slidell, presented his portion of the compromise bills to the committee but also argued that they would not solve the problems in the pension system. Pearson carried the Landrieu administration’s bills this session.

“I don’t know what it’s going to take to get these systems up to a reasonably funded level,” Pearson said.

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