BGR’s report, A Retreat on Pension Reform: City of New Orleans Reverses Steps to Rein in Sharply Rising Pension Costs by Increasing Benefits, analyzes the City’s little-publicized decision last fall to reverse pension benefit reductions intended to address a steady weakening of the pension system’s finances and a steep rise in the public’s costs.
With almost no public discussion or justification, the City of New Orleans retroactively increased pension benefits last fall by 32% for about 1,000 employees hired since 2018, and all future hires, at substantial cost to the public. This reversed reforms enacted just three years ago to address a steady weakening of the pension system’s finances and a steep rise in the public’s costs. The higher benefits will consume limited public resources that could have funded other City needs. BGR’s analysis of the pension increases in A Retreat on Pension Reform: City of New Orleans Reverses Steps to Rein in Sharply Rising Pension Costs by Increasing Benefits finds significant problems with virtually every aspect of the decision-making process. Moreover, officials with the City and pension system did not respond to BGR’s repeated questions about the pension increases.
In late 2017, the City Council reduced pension benefits for employees hired on or after January 1, 2018, to match national norms. In response to concerns raised during extensive public discussion, the council excluded then-current employees from the benefit reduction. The reforms aligned with recommendations from a series of BGR reports that found many pension systems for local public employees, including the City’s, provide benefits well in excess of national norms at substantial cost to taxpayers.
