The city, the estimate says, will save nothing from cutting certain pension contributions for unionized employees. The reform calls for the city to reduce the percentage of the employees’ contribution it pays toward their pension, a benefit called an “offset” or “pickup.”
How can a reduction result in zero savings?
Simple. If you give employees something back to make up for taking away the benefit, you save nothing.
The city intends to do just that, said Chief Operating Officer Jay Goldstone.
“It will probably end up being a negotiated trade off for something else they had given up,” Goldstone said.
Most city labor unions eliminated their pickups as part of 6 percent compensation cuts taken by all city employees last year. But the city’s white-collar and lifeguard unions kept the pickups and cut their compensation in other ways.
Goldstone said it wouldn’t be fair to force those employees to take a larger cut than others.
“We’re trying to treat the employees fairly,” he said.
Overall, pickups cost the city about $4.8 million annually from its day-to-day operating budget. That’s not a huge sum in a billion-dollar budget, but it illustrates a bigger point.
If the city gives back some of the savings it achieves through the financial reform package, how does it address its ultimate problem — the $70-plus million ongoing budget deficit?
This reform, Goldstone concedes, doesn’t.
“The other ones do,” he said.
In a larger context, pickups aren’t the only pension giveback the city is considering.
Labor unions are pushing City Council to exclude disability benefits from employees’ pension contributions, which workers now are paying for the first time. Employees paying those costs are saving the city an estimated $2.6 million this year.
– LIAM DILLON