Omaha Mayor Jean Stothert, her team that negotiates labor contracts, city employees and their unions should be commended for addressing public pension program shortfalls.
The city now has agreements in principle with all of its civilian unions, police and firefighters.
Stothert is right to celebrate moving new city civilian hires out of old-fashioned pension plans and into hybrid cash-balance plans. This change will help the city budget over the long term.
There’s a reason a World-Herald Poll conducted this month showed Stothert’s approval rating at 60 percent. The actions being taken by her administration on the pension issue serve the public interest, and Omahans like the progress they’re seeing.
Each of the city’s major public employee unions deserves credit, too, for looking past the changes’ short-term pain to help the city tackle problems with its various retirement funds and funding.
The latest moves help close a $205 million shortfall in the city’s civilian employee pension fund. They decrease the city’s exposure to risk. Under traditional pension plans, if the stock market tanks or falls short, taxpayers and current employees pay more to make the plans whole.
The winners here are city taxpayers. They avoid millions of dollars in potential pension costs for plans that, left unchanged, faced insolvency. They should see streets and sewers repaired at lower interest rates that go only to cities that handle their finances well. Bonds will be easier to sell.
The union leaders who helped salvage traditional pension plans for police and fire department employees also deserve credit for member decisions to pay more and receive less. Those changes helped stabilize the plans. Late last year, the city’s public safety pension fund had about $620 million in unfunded liability. The changes should make the public safety pension fund solvent in 21 years, about half as long as anticipated.
Under the city’s new agreements with employees, members of most city unions will work longer to retire. And, in many cases, they will see their maximum benefits capped at a lower percentage of pay.
Tough decisions all around. But they show understanding by the unions that life for people not employed by taxpayers is different than it was when public pension plans were adopted.
Many in the private sector no longer have pension plans as a retirement option. Most have lower employee contributions than the city’s new hybrid plans. But workers make do. They save and invest.
Public employees do, too.
The city’s next steps in contract negotiations deal with getting health care costs under control, Stothert told The World-Herald. Public employees will soon see the wellness plans and incentives for healthier living common in the private sector.
They’ll likely have to pick up more of the tab.
In many places, such changes could harden employee stances and lead to strife that erodes public support for employees. In Omaha, though, city leaders and city unions continue to work in the best interests of the city and its taxpayers.
That is worth celebrating.