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Cypen & Cypen
September 13, 2012

Stephen H. Cypen, Esq., Editor

1.      GROUPS DEFEND PUBLIC PENSIONS: Backers of pension plans that promise public employees a predetermined benefit when they retire are taking the offensive against opponents who want to do away with such benefits.  As reported by, a forum hosted by three Texas Association of Public Employee Retirement Systems, public pension officials from around the state were warned their plans are at risk from deep-pocketed foes.  The groups executive director listed about a dozen organizations and individuals leading the charge against such plans.  Among those identified were Houston’s Laura and John Arnold Foundation and the Koch brothers of petroleum and mining conglomerate Koch Industries Inc.  There are groups out there whose sole objective is to take away the defined benefits of public employees.  Opponents contend the rising costs of public pensions are unsustainable, with unfunded liabilities climbing.  Some municipalities around the country have filed for bankruptcy, allegedly, in part, because of rising pension costs.  For the most part, opponents of defined benefit plans are against raising taxes to fund pension liabilities.  They also favor public employees participating in defined contributions plans, such as 401(k) plans, where future benefits are determined by employee and employer contributions and investment earnings.  In private industry, the plans have largely replaced defined benefit pensions.  Public employees should not expect much empathy from those in the private sector.  Clearly: do you think they would really support you having a defined benefit pension system, a guaranteed program, where they do not?  “If you decide to sit on your hands and do nothing, then that’s what your going to have, nothing.”
2.      A HEARING OFFICER FINDS THAT STATE OF FLORIDA COMMITTED UNFAIR LABOR PRACTICES:  Section 447.501(1) (c), Florida Statutes, makes it an unfair labor practice for a public employer who refused to bargain collectively, who failed to bargain in good faith or who refused to sign a final agreement agreed upon with the certified bargaining agent for the public employees in the bargaining unit.  Florida State Fire Services Association, IAFF, Local S-20, filed an unfair labor practice charge against the State of Florida, alleging that it violated,  inter alia, Section 447.501(1)(c), Florida Statutes, by the manner in which it resolved an impasse in bargaining over contract re-opener articles covering dues checked-off, health and welfare and retirement pensions.  The hearing officer has concluded that the State had in fact violated said statute, by obtaining through an impasse resolution a waiver of future bargaining over pensions at the conclusion of the re-opener bargaining.  The last contract provided that all bargaining unit members shall continue to participate in the Florida Retirement System at no cost to the employee.   The union proposed leaving the provision  status quo. The substitute article that was proposed by the Governor and Legislature states the State agrees to administer the Florida Retirement System in accordance with any statutory provisions or act affecting the plan or its operation.  By substituting the above language, the State created a  status quothat allows the Legislature to change the pension plan without any bargaining with the employees.  This substitution changes the bargaining dynamic from changes made after the employees have had an opportunity to go through the bargaining process and impasse resolution if necessary, to changes made before any bargaining begins.  As a result of the resolution of the impasse and newly-enacted legislation defining benefits of the Florida Retirement System, the bargaining unit members were obligated to contribute 3% of their total compensation to FRS, whereas previously bargaining unit members had participated in FRS at no cost to the employee.  Because of the unusual situation (that is, involving the State, Governor and the Legislature), the hearing officer felt the only appropriate remedy was to have the State compensate the union for its necessary attorneys fees and litigation costs for the portion on which it prevailed.   Florida State Fire Services Association, IAFF, Local S-20 v. State of Florida, Case No. CA-2011-109 (Fla. PERC August 30, 2012).
3.      IN DISSOLUTION OF MARRIAGE CASE, STATE COURT CANNOT ALLOCATE MILITARY DISABILITY BENEFITS TO SPOUSE:   James and Tonya were divorced.  Incorporated into the final judgment of divorce was the child custody and support and property settlement agreement.  A significant portion of the financial settlement that Tonya received in the property settlement agreement consisted of 40 percent of James’s disposable military retirement pay for ten years.  Following the divorce, James elected to adopt a sixty-percent disability rating as part of his retirement pay.  James did not provide any of these disability benefits to Tonya.  Tonya filed a petition for contempt, asserting that James had structured his retirement in such a way as to defeat her 40-percent interest in the total retirement pay.  A State court judge determined that Tonya was entitled to 40-percent of the disability benefits, although he did decline to find James in contempt.  On appeal, the Supreme Court of Mississippi held that, since federal law preempts state law, state courts are precluded from allocating military disability benefits to a nonmilitary spouse.  Therefore, the judgment was reversed and remanded for further proceedings.  In a footnote, the court wrote that today the equities now may be more balanced then they were at the time parties here entered into their settlement agreement.  Effective January 1, 2004, Congress enacted legislation that allows concurrent receipt of both retired pay and disability benefits (“concurrent retirement and disability pay”).   Mallard v. Burkart, Case No. 2010-CA-02069-SCT (Miss. August 30, 2012).
4.      WORKING TO AGE 70 MAY NOT BE ENOUGH:  Contrary to some reports that working just a little bit longer to age 70, will allow between 80 and 90 percent of households to have an adequate income in retirement, new research by the nonpartisan Employee Benefit Research Institute shows that for approximately one-third of households between the ages of 30 and 59 in 2007 that will not be enough.  The latest research extends from projections that large numbers of Baby Boomers and Generation X workers are likely to run short of what they need to cover general expenses and uninsured heath care expenses in retirement.  Working longer can, however, have a positive impact.  Results show that nearly two-thirds (64 percent) of households aged 50-59 in 2007 would be considered ready for retirement age 70, compared with 52 percent of those same households if they were to retire at age 65.  Moreover, a worker’s participation status in a defined contribution plan at age 65 will be extremely important to multi-year consequences for additional employee and employer contributions to the plan.  Among the key reasons for the differences between EBRI’s estimates and other models is that EBRI’s research is based on data from millions of actual 401(k) participants and its model incorporates longevity risks, investment risks and the risk of potentially catastrophic health care costs (such as prolonged stays in nursing home). 
5.       SAN JOSE PD LOSING SOME OF ITS BEST–AFTER PENSION REFORM:  Colleagues told Jincy Pace that one day she would be deputy chief of the San Jose, California, Police Department.  Smart, hardworking and respected, the West Point graduate has all the attributes for a high-ranking position, according to the  San JoseMercury News.   But Pace still has that goal, but it will not happen in San Jose.  After almost 14 years with the department, Pace left, trading in her sergeant’s badge to become a patrol officer in Hillsboro, Oregon.  Pace is one of 79 officers who have resigned from the San Jose Police Department since 2011, including 30 this year.  The San Jose Police Chief said for the first time in department’s history more officers are resigning –primarily for jobs with other departments – then are retiring.  Twenty-one officers have retired this year.  The Chief and union officials say the reason is twofold.  After pension reform and pay cuts, officers can make more money and better benefits elsewhere, even at smaller departments.  Others, including veteran officers, are leave because they say the once-proud force is dispirited, overworked and rife with morale problems.  They do not see the same opportunities and proactive policing they once did.  As a result of the exodus, the police department staffing is substantially lower than what is authorized.  There are 1,055 sworn officers instead of 1,109.  For the patrol division, the problem is even greater.  It is authorized for 548 officers, but has only 492.  On the roles, 32 of the officers are not available for duty due to various reasons.  In 2008, the patrol division boasted nearly 600 officers.  The fear among officers is that the number will continue to drop and put a greater drain on their safety and ability to answer calls for service. 
6.      APPOINTING AUTHORITY HAS DISCRETION TO SUSPEND MERIT PAY RAISES:  Fraternal Order of Police and employees of the Jefferson County Sheriff’s Office appealed the summary judgment in favor of the County, the Personnel Board and the Sheriff in an action regarding suspension of merit pay raises for classified employees of the Jefferson County Sheriff’s Office.  The Supreme Court of Alabama affirmed.  The enabling statute authorized the Personnel Board to enact rules and regulations, which had the force of law.  The rule on salary adjustment provided that the annual salary advancement within an established pay grade shall be based on meritorious performance on the job and shall be in accordance with the special provisions for administering the pay plan.  In the discretion of the appointing authority, a classified employee with continued satisfactory service shall be eligible for future one-step annual increase until such time as the classified employee reaches his maximum pay-step for the pay grade.  In the circuit court, defendants contended that the language gives an appointing authority discretion to implement across-the-board suspension of merit pay raises to its employees.  The employees argued that the language merely provided that an appointing authority can assess whether an employee had “satisfactory service” as permitted by the Enabling Act.  On appeal, the employees argued that plain language of the statute requires the personnel board to implement a system for salary advancement for the pay steps within a pay grade.  But, having established a system for salary advancement, the board is not authorized, by rule or otherwise, to give each appointing authority the option whether to implement the required system for salary advancement in a given fiscal year.  In other words, the act requires the personnel board and appointing authority to provide merit pay raises to qualified employees and the Legislature did not give those entities the discretion to halt such raises for any reason.  In addition, the employees’ interpretation would produce absurd results: for example, under the employees’ interpretation, an appointing authority must grant merit raises, but it could negate those raises through a wholesale reduction in the salary schedule.  In sum, the high court concluded that the requirement of the Enabling Act that the pay plan must provide for advancement for salary within each class or grade on the basis of efficiency and length of service does not prohibit the personnel board from authorizing across-the-board suspensions of merit raises by appointing authorities.   Fraternal Order of Police, Lodge No. 64 v. Personnel Board of Jefferson County, Case No. 1100430 (Ala. August 24, 2012.)
7.      GOLF WISDOMS:   A ball you can see in the rough from 50 yards away is not yours.
8.       PUNOGRAPHICS   I used to be a banker, but then I lost interest.       
9.       QUOTE OF THE WEEK:   “We hang the petty thieves and appoint the great ones to public office.”   Aesop
10.    ON THIS DAY IN HISTORY:  In 1971, Frank Robinson hit his 500th home run.
11.     KEEP THOSE CARDS AND LETTERS COMING:  Several readers regularly supply us with suggestions or tips for newsletter items.  Please feel free to send us or point us to matters you think would be of interest to our readers.  Subject to editorial discretion, we may print them.  Rest assured that we will not publish any names as referring sources. 
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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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