Two Important Changes

March 5, 2013

In looking at how to save money on what we pay our public employees, there are a number of things that come to mind. Salaries and benefits (vacations, sick days, personal days etc) and pensions compared to private sector comparable jobs. There are millions of dollars to be saved here and still maintain fairness with the private sector. Hopefully Mayor Wharton’s total financial review will address these items in the upcoming budget season.

However there are two things that need special consideration concerning the City of Memphis, the MLGW, Shelby County and the school system and any other public taxpayer financed subsidiary in Shelby County.

One is the line of duty disability system at the City of Memphis. I was the first one to notice that the line of duty disability rate of approval at the City of Memphis was 10 times higher than Shelby County government or the MLGW. I asked why.

The answer was in the pension ordinance. The ordinance states the following concerning the makeup of the pension board which approves disability applications.

Sec. 4-8-1 The board shall consist of the

mayor or the mayor’s designee, the comptroller and five employees with at least ten (l0) years of service, a citizen member of the city, a retiree of the plan, and a member of the city council.

 

The pension ordinance needs to be changed so that, like the county, decisions about disability are made by an insurance company. This is costing the City of Memphis over $12 million dollars per year.

The other item is allowing employees receiving a pension to go to another public employer and continue receiving their pension and a salary from the new employer. The salary of the new public employee should be reduced by the amount of the pension. There are a number of examples of this double dipping and these needs to be corrected and reformed.

These two changes could save millions once fully implemented. I would appreciate other suggestions to forward to the two mayors, the MLGW and the school board.

 

 

 

 

One Response to “Two Important Changes”

  1. J V in Cordova says:

    I’m not sure the “anti-double dipping” rationale makes sense. If a person puts in at least the minimum number of required years for retirement, that person should receive the “contracted” retirement checks regardless of further efforts elsewhere. Federal law forced many companies to eliminate such retirement check reductions for retirees finally receiving Social Security checks.

    Such an “anti-double dipping” policy could discourage or prevent highly qualified candidates (who are retired from previous jobs) from holding public jobs where their skills and training would benefit the public. Does that make sense? The second public entity hiring a retiree will have no added costs, nor will the first.

    The real problem lies in retirement plans which allow public employees to retire after 12 years, or as with our esteemed Congress and Senate, after only one term.

    Many companies are changing to defined contribution retirement plans rather than defined benefit retirement plans. One benefit of defined contribution plans is the protection of the employees’ funds in case of company collapse. The first thing many failing companies do is petition the courts – usually successfully – for the money set aside in the retire fund. Defined contribution plans help prevent that, but they can also help address this double dipping issue.

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