A revised contract that would provide health care benefits to retired Scranton police officers could be a future budget buster that would cripple the city financially for decades to come, a Times-Tribune analysis shows.
Mayor Bill Courtright’s administration has touted the deal as a significant breakthrough that will save the city up to $4.5 million over the life of the contract. Those savings don’t account for the possibility the city could be obligated to pay costly health care benefits for decades to come, however.
The debate centers on how many people will qualify for the benefits. The city’s analysis is based on six people being eligible for the benefits, but that assumes the city will be able to remove the perk after the contract expires in 2021. If the city cannot, it would be obligated to pay the benefits to 99 current employees in the ensuing decades, the newspaper’s review found.
“The mindset is the union will give it back. That’s just not the way it works,” said Councilman Wayne Evans, one of three council members who voted Thursday to table a vote on the memorandum of understanding that would alter the current contract. “It’s very hard to get any kind of concession. That’s a very, very attractive benefit. … Once it’s in there, that’s a budget buster and something the city could not sustain.”
The health care provision is among several enhanced benefits the city offered in exchange for concessions from police that Police Chief Carl Graziano estimated could save $4.5 million. The city’s labor attorney, Edwin Abrahamsen, previously estimated the savings at $750,000 to $1 million a year. That analysis did not include all costs and revenue, however.
Mr. Graziano’s savings include $1.3 million from eliminating a minimum manning clause, roughly $846,000 from other staffing changes and $2.5 million in increased revenue from parking violations that will result from having two civilians dedicated to writing tickets.
The analysis, which was provided to council on Thursday, did not include a deduction for the cost of the health care benefits. Mr. Abrahamsen on Friday said he estimated that cost would be $445,000 over a 10-year-period, which would start in 2020 and 2021 — the first year anyone would qualify for the benefit.
That calculation is based on the assumption only two of the six officers who are eligible will actually retire, he said. Even if all six retire, the cost would be $1.3 million over 10 years.
Mr. Evans and councilmen Joe Wechsler,Bill Gaughan and Bob McGoff said that cost, if accurate, might be manageable. The question, they said, is whether the city can afford to gamble that it will be able to halt the health care benefits in the future.
The contract would provide the benefits to officers who were hired after Jan. 1, 1994 and retire with 25 years of service. The benefit would extend to those employees’ spouses. The city requires officers be age 55 with 25 years before they can receive their pension. The age requirement was removed for the health care benefits, however, which means an officer could retire before age 55. He or she would not receive their monthly pension until 55, but the city would be obligated to immediately pay their health care until they reach Medicare age, currently 65.
The newspaper’s review showed there are 99 current employees who were hired after 1994 who would some day qualify for health care benefits if the perk is never negotiated out.
“That is what we are concerned about. If this remains in the next contracts, it could become a major burden to the city,” Mr. Wechsler said.
Mr. McGoff said he’s also concerned about the potential future ramifications. City officials say they’re confident the city could remove the perk in the future, but he’s not convinced.
“While that is a possibility, I don’t know that would be something the unions would accept,” Mr. McGoff said.
Mr. Abrahamsen said he believes concerns the newspaper and council members have raised are overstated. He contends the agreement is a great deal for the city, and that detractors are focusing too heavily on potential pitfalls.
“We just negotiated a substantial savings in new hires and a large increase in retirement contributions and much, much more,” he said. “If you want to nitpick, you can nitpick. I think the contract as a whole is excellent.”
Mr. Evans said he and other council members would be more comfortable if the city added language that states health care benefits apply only to the six employees and will not be provided to anyone else after the contract expires. The city previously did that with a 2012 settlement agreement it reached with police.
“There has to be some fail safe past 2021,” Mr. Evans said.
Mr. Evans said he’s hopeful the city will consider that. It was not clear Friday if the city can alter the memorandum of understanding since it was already approved by the police union and signed by Mr. Courtright.
Council’s decision to table a vote leaves the issue in limbo. Several council members said they’ve asked for additional information, which the city has promised to provide by early this week.
Mr. McGoff said that while he has concerns, he is leaning toward voting to approve the contract because the city is in dire need of financial concessions now.
“It comes down to a ‘what if’ situation. Can it be renegotiated in 2021? Hopefully,” Mr. McGoff said. “I know that’s kind of kicking it down the road. If we don’t implement some changes in the contract, we are going to be worse off in the short run. … I don’t know that we can sustain the contract as it is through 2017.”
Contact the writer: tbesecker@timesshamrock.com