A long-brewing dispute regarding a roughly $8 million portion of the city’s pension debt is heading to court.
The Springfield Police Officers Association, the union that represents the rank and file in the local police department, on Monday filed suit against the city, alleging city leaders — and by extension, city taxpayers — should be responsible for paying some of the cost of a pension benefit increase that police and firefighters brokered in 1999.
At the time, employees agreed to pay for the benefit (which allows them to accrue full benefits in 25 years, rather than 28) themselves, through an extra payroll deduction called the Additional Funding Contribution, or AFC. But the cost of the benefit has ballooned.
Employees responsible for paying for the benefit began with a significant deficit, because older employees who retired soon after it was approved gained the full benefit without paying an equitable share. Poor stock market performance in the past decade has caused the shortfall to grow even more, even as the overall pension shortfall has been shrinking, thanks to the 3/4-cent sales tax approved in 2009
Despite that, police and fire representatives have said they would have been able to foot the bill if not for the city’s decision in 2006 to close the police-fire pension plan to new entrants and shift new employees to a different retirement plan, which has been rolled into the state LAGERS program.
By cutting off the stream of new employees, the city effectively changed the terms of the deal, the police union argues, forcing the dwindling number of “Tier I” employees hired before 2006 to pay off the accumulated debt at an accelerated pace. According to estimates by a pension consultant, the remaining Tier I employees soon could be forced to hand over 20 percent or more of their paychecks to pay the AFC debt, with contributions likely to increase as the number of active-duty officers dwindles further.
The expected trouble isn’t a surprise — the city and police and fire leaders have been discussing the potential problem since before the 2009 pension tax vote. In 2010, the city made a $4.75 million lump sum payment that was meant to settle the issue. But the debt has continued to grow, prompting City Manager Greg Burris to call for further study and discussion of the issue last year.
That effort appears to have stalled. In the lawsuit filed Monday, the police union says it was rebuffed when it asked the city to hold meet and confer sessions about the issue in February.
In the lawsuit, the union asks a judge to declare the city at least partly responsible for paying the AFC debt, and to throw out the 2010 agreement.
The lawsuit also asks a judge to declare that revenue from the city’s 3/4-cent pension sales tax, which was renewed through 2019, can be used to pay off the AFC debt employees were supposed to pay. In the lawsuit, the SPOA argues that the ballot language approving the tax doesn’t differentiate between the public pension debt and the debt attributed to employees, and that the pension can’t be “fully funded” (causing the tax to expire) unless all debts are paid.
Finally, the lawsuit calls for a February vote by the police-fire pension board of trustees, related to certain AFC calculations, to be declared void. In the lawsuit, the union alleges that the vote was not properly advertised on the pension board’s posted agenda, in violation of the state Sunshine Law.
SPOA President Mike Evans said the union had been talking with the city about how to resolve the AFC issue. As late as January, Evans said, the city manager had sent notice asking to set up meetings.
But Evans said the union resorted to the lawsuit after the city refused, through a contract attorney, to hold formal meet and confer sessions about the AFC issue.
He said the union’s goal is not to get out of the AFC payments entirely, but to have a judge calculate how much employees would have paid if new officers were still available to foot the bill. The remaining employees who receive the benefit are willing to pay that amount, he said, with the city picking up the difference caused by the closure of the plan.
Firefighters, meanwhile, are pursuing their own negotiations with the city, according to union president Tony Kelley.
“We were aware that SPOA was contemplating a lawsuit … (but) we’re not a part of it at this point in time,” he said. “We’re going to try to enter into negotiations with the city to address the AFC issue and hopefully come out of that with some sort of policy resolution.”
Contacted Monday afternoon, city spokeswoman Cora Scott said City of Springfield officials had not yet been served with the lawsuit and could not comment on its contents.