March 12–Scranton Mayor Bill Courtright announced Friday that his administration reached a key settlement with the city’s police and firefighter unions to finally pay them millions in back pay overdue to them from a landmark arbitration court ruling and implement some pension reforms.
The pact will pay the unions and retirees what they are owed under a 2011 state Supreme Court ruling in their favor and some of the interest penalties that has been accruing in recent years, said the mayor, although he would not immediately divulge a total figure for the settlement.
The agreement also contains pension reforms, including the unions agreeing to put $1 million of interest penalties into their distressed-pension funds, having their pensions managed by a third-party administrator and having a neutral doctor determine disability pensions. Retirees also would not receive interest, which the mayor said would save the city more than $3 million.
“This is huge,” Mr. Courtright said in a telephone interview about the settlement that had been elusive for years.
Mr. Courtright said he would not release a total settlement figure because memberships of each union have not yet voted on the accord.
His press release states the unions were owed $16 million for five years of lost wages during a protracted legal battle between the former Doherty administration and the unions; while the retirees were owed $7.6 million, not including interest.
After the landmark 2011 court ruling, the award went unpaid by the financially struggling city that became embroiled in a fiscal default crisis in 2012. In mid-2013, the unions received a judgment of $20.9 million against the city for the back pay, with 6 percent interest. The interest accrued at $100,000 per month. With back pay, longevity and interest, the amount owed had been pegged by the city last year as expected to grow to at least $24.2 million by the end of 2015.
In declining to provide a ballpark figure Friday night of the total settlement amount, the mayor said he had plans to release more details next week, possibly on Monday.
“When you hear the numbers — it’s lot of money,” the mayor said. “It is what it is. You can’t change the numbers” of what’s owed under the court ruling and the later judgment against the city.
The statement was released late Friday because that’s when the deal was reached after two days of mediation before Lackawanna County Judge Robert Mazzoni, the mayor said.
His statement said in part that “a liability amounting to more than a quarter of our city’s budget is finally off our back, off our balance sheet, and that we did it by fighting hard for concessions, standing firm with the banks to demand a fair interest rate (on financing) and ensuring real, game-changing pension reforms as an absolute non-negotiable condition for my approval of this deal.”
The settlement also could be rejected by the rank-and-file union members, the mayor said.
Officials reached for comment by phone Friday night said they were not aware of or privy to all of the details, including the total amount of the settlement, but generally agreed that it represents a big achievement for the administration and city.
“I think it’s good news from the point of view that city has put behind it the award settlement, and even better news that the city is able to get favorable borrowing terms, to be able to afford to pay the repayment. The progress of last two years is continuing,” said Gerald Cross, executive director of Pennsylvania Economy League, the city’s Act 47 recovery coordinator.
Council President Joe Wechsler and Councilman Wayne Evans said the deal sounds like a positive for the city.
“If we can clear the deck, and if some of the money (owed) goes into the pensions, I think that’s a win.”
Mr. Evans has argued regularly at council meetings for linking the back-pay award to pension reforms.
This sounds relatively like good news,” Mr. Evans said. “It’s a start. There’s more to be done.”
Efforts to reach leaders of both unions were unsuccessful.
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