Cypen & Cypen
AUGUST 14, 2008
Stephen H. Cypen, Esq., Editor
As reported by The Plain Dealer, the City of Cleveland has agreed to pay more than $10 Million to settle a decade-old dispute with police officers. Some officers sued in 1999, challenging the city’s practice of not paying for overtime, and instead letting them bank hours of “comp time,” which would be cashed out upon retirement. Officers who wished to use the accrued time for days off were not always allowed, because of low staffing. Under terms of the settlement, more than $2 Million will be split among the plaintiffs. The rest will go to other officers who have comp time banked. The city says that paying for comp time now will save money in the future because retiring officers could cash out at the highest pay rates. The city will eliminate the comp time option under a related deal with the police union.
The Boston Retirement Board voted to reject the disability pension application of Boston firefighter Albert Arroyo, who competed in a bodybuilding contest just six weeks after reporting he was permanently incapacitated and unable to work as a fire inspector (see C&C Newsletter for July 31, 2008, Item 8). According to the Boston Globe, the Board issued its ruling on grounds that Arroyo’s application was incomplete. (The Board also voted to take the first steps in what one Board member described as a wide-reaching overhaul of Board operations and to hire a forensic accountant to conduct fraud assessment of hundreds of past disability pension claims.) Meanwhile, the Boston Fire Department removed Arroyo from its payroll after he failed to report for work for two weeks, defying a return-to-work order. He now has ten days to appeal that action. The Board’s decision does not preclude Arroyo from submitting another, more complete application. In fact, Arroyo’s lawyer indicated that he did plan to resubmit an application, including a second medical opinion confirming the original one. (When recently asked if he stood by his initial diagnosis, the doctor who submitted the original opinion supporting disability said he was unaware of Arroyo’s bodybuilding, but did not say whether he stood by his earlier diagnosis of disability.) Flex, please.
In accordance with Chapter 2008-139, required Florida Retirement System contribution rates for special risk class, currently 19.76%, will rise to 22.03% as of July 1, 2009. The following are required employer contribution rates for each membership class and subclass of the Florida Retirement System for both defined benefit retirement program and the Public Employee Optional Retirement Program (defined contribution):
Regular Class 8.69% 9.60%
Special Risk Class 19.76% 22.03%
Elected Officers Class -
Elected Officers Class -
Elected Officers Class -
Senior Management Class 11.96% 13.36%
DROP 9.80% 10.96%
As usual, the Legislature found that a proper and legitimate state purpose is served when employees and retirees of the state and its political subdivisions, and the dependents, survivors and beneficiaries of such employees and retirees, are extended the basic protections afforded by governmental retirement systems. These persons must be provided benefits that are fair and adequate and that are managed, administered and funded in an actuarially sound manner, as required by Section 14, Article X of the State Constitution, and Part VII of Chapter 112, Florida Statutes. Therefore, the Legislature has determined and declared that the act fulfills an important state interest. And the beat goes on.
Boston.com reports that Governor Deval Patrick last week “quietly” vetoed a pension increase for retired teachers and state workers that would have boosted benefits by $120 per year, a major stand for a governor to take against unions that helped elect him. The Governor had been largely supportive of the pension boosts -- and was expected to sign the legislation -- but requested that the cost-of-living increases be restricted to workers with pensions less than $40,000. State pensions in Massachusetts are adjusted annually by the Legislature, which since 2000 has given a 3% increase on the first $12,000 of retirement pay, or $360 a year. Under legislation approved unanimously by the House and Senate, the base amount would have been raised from $12,000 to $16,000, in effect raising the pension for every retiree by $120, a 33% increase. The Governor objected to that plan, and sent an amendment back asking for the bump to apply only to the 87% of retirees with pensions under $40,000.
Boeing does not raid its workers’ pension funds to pay extraordinary executive pension benefits, the company told thenewstribune.com. The statement came in reply to a request from a union representing Boeing’s engineering and technical workers about whether the company fwas moving some of its executive pension liabilities to the workers’ pension fund in a way some companies did according to a recent Wall Street Journal article. The subject article, referred to in the Society of Professional Engineering Employees in Aerospace’s request, dealt with companies that transferred extraordinary pension obligations for executives to the companies’ pension funds for lower-paid workers, in some cases without providing additional funding. The effect of such transfers would be to provide tax benefits to the companies, but weaken pension funds for other workers. The union, which represents over 20,000 workers at the company, asked Boeing for more information on its pension funds. Boeing admits wanting to shift new employees to a defined contribution plan, but the union (obviously) opposes such a plan.
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