Mayor-elect Bill Peduto’s transition chief Kevin Acklin talks Thursday in the hallway outside of the mayor’s office about the vote on the pension fund.
By Timothy McNulty / Pittsburgh Post-Gazette
Mayor Luke Ravenstahl and successor Bill Peduto keep exchanging lovely parting gifts in these waning days of the outgoing administration.
Mr. Ravenstahl pushed through a city pension change on Thursday that will cost the city $5 million annually in coming years, which his longtime rival opposed. On the same day, the mayor-elect's transition team unveiled financial details behind a buyout offer for non-union city employees next month, many of them Ravenstahl appointees who will be on the outs after the Peduto takeover.
In a special meeting of the Comprehensive Municipal Trust Fund board, Mr. Ravenstahl and his allies lowered the city's assumptions on its pension investment returns, which will trigger increased payouts from the city's operating budget to meet its minimum obligations to retirees.
Instead of expecting an 8 percent return, the pension fund will now figure on 7.5 percent. The mayor, voting by phone, joined council President Darlene Harris, city Controller Michael Lamb and members of the police and firefighter unions in making the move. Mr. Lamb has long pushed for the change, but in a pension board meeting in August 2012, the mayor, Mrs. Harris and fire union president Joe King opposed it, with Mr. Ravenstahl worried about the impact on the budget.
Mr. Ravenstahl did not speak at Thursday's meeting. Board members Michael Huss, the city's public safety director, and Ian Frankel, a member of the paramedics union, opposed the change.
Mr. Peduto's transition chief Kevin Acklin said the mayor-elect supports such a move over the long term, but its timing was inappropriate with less than a month left in the Ravenstahl administration.
"Obviously, it's going to have a dramatic impact on the budget and we weren't even consulted," he said.
On the day after the Nov. 5 mayoral election, the Peduto team asked Mr. Ravenstahl not to make any large-scale moves in his last weeks that could affect city business in the new administration. Mr. King, a fierce negotiator and pension board member since the Sophie Masloff administration, said that had no hold on him or city retirees.
Board members are supposed to "make our pensions and our family's entitlements better," Mr. King said. "I don't care what agreement was made with the outgoing mayor and the new mayor."
The chairman of the state's Intergovernmental Cooperation Authority, Nicholas Varischetti, hailed the board's move as "a much more realistic approach to the rate of return" that will strengthen the city's long-suffering pension fund. He said the fiscal oversight board will work with the Peduto administration, unions and others to tackle the impact on future operating budgets.
It also is possible the board could reverse the move when it meets again in February, with two new voting members from the Peduto administration and possibly a new council president.
In related news Mr. Acklin said the transition team's proposal to offer some city employees buyouts would cost the city an estimated $1.85 million next year. Mr. Peduto wants to offer some 136 non-union employees buyouts equal to 2.5 weeks worth of salary for every year they have worked for the city, as long as they are at least 50 years old and have eight years of service. The buyout would be capped at one year's total salary.
If, as estimated, half the employees take the deal, it would cost $2.9 million, but because the incoming administration expects to keep one-third of the positions unfilled the cost would be $1 million less. Across five years, counting cuts to benefits and other personnel costs, the savings would be $2.4 million.
The transition team also is contemplating a wider offer to 176 total employees that would cost $2.8 million next year but save nearly $3.7 million over five years. To be eligible, employees would need a combined 70 years of age and city service.
The Peduto team initially proposed a temporary change in city pension law to implement the early retirement plan, but Mr. Ravenstahl and the ICA disapproved. The new plan would be funded completely from the city's budget, and may be the subject a City Council public hearing later this month.
The transition team plans to fill scores of non-union positions with the help of the foundation-backed Talent-City.com website, which will force "a lot of turnover" among the jobs come January, Mr. Acklin said. That is why Mr. Peduto wants to offer the buyouts.
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