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POLC solves Burton Police pension crisis

Posted by: jgomori Posted date: May 29, 2019

— By Jennifer Gomori, POJ Editor

Burton Patrol Officers were paying the price for a pension package which benefited older retirees at a significant cost to existing employees. That is until the POLC stepped into contract negotiations. Burton Patrol Officers walked away with significant pay raises and the assurance that the underfunded pension would no longer be funded by them.

The 25-member unit, which had been represented by POAM since they first unionized over two decades ago, struggled through contract negotiations in recent years that left officers with depleting paychecks and feeling hopeless. With a seemingly unsolvable legacy issue with their pensions they finally ended their relationship with POAM and voted to become POLC members in the summer of 2017.

“More than a year ago they decided to pick us as their new union. Immediately after the change, the City demanded to negotiate the patrol contract early and they were pushing for a reduction in pension benefits,” said POLC Labor Rep. Chris Watts. “Unfortunately, there were bad business decisions made in earlier years by both the City as well as the previous union. When the members switched from their old union to the POLC, the City felt this would be the perfect time to address the pension liabilities. We spent more than a year in negotiations. Ultimately, we did bridge the pension down.”

The change was necessary to maintain a stable working environment for current and future Employees, Watts said. “The older officers had a Cadillac pension and we had the worst possible pension you could imagine. We tried to resolve the pension with the City and ended up taking it all the way to arbitration with POAM, but we lost,” said Local Union Vice President Mark Mahon. “No one in the past would touch the pension issues and it hurt the City financially. At one point, we (the Employees) were paying up to 27 percent into that upside-down pension the older Employees had through MERS.”

The new contract, negotiated by the officers and Watts, bridges down the former Defined Benefit (DB) 2.25 percent multiplier to 1.5 percent. In exchange for the bridged down pension, Watts said, the City removed the age requirement of 55 years old as a term of retirement for current officers. Upon ratification, officers hired prior to July 1, 2018 would be able to retire once they worked 25 years for the City. Those hired after July 1, 2018 will also have the 1.5 percent multiplier and 25 years of service requirement but must be at least 55 years old to be eligible for full retirement.

However, in addition to the pension changes, the Employer will pay 3 percent into an interest-bearing account (similar to a Defined Contribution (DC) Plan). The City will also place a $5,000 primer payment into existing 457 accounts or new DC Plans, which shall be divided equally into each year of the contract. Wage re-openers follow in years three and four of the contract.

“Under the old contract, patrol officers also had no cap on their Employee contributions,” Watts said. “With this contract, the City locked the Employee contributions at 10 percent. Three years ago, they were paying 27 percent. Additionally, the pay scale for patrol was condensed from a 10-year top out to a 5-year. Many current officers saw large wage increases immediately, which they were not anticipating for several years down the road. We are hopeful the officers will continue to move in a more positive direction in the future while they serve the Burton community.”

“We exhausted everything we could with the POAM. We tried something new and it turned out pretty well for us,” Mahon said. “I think it was win-win for the City and the police department. Basically, Watts and the POLC have done for us what POAM hasn’t been able to do in 20 years. We not getting the Cadillac pension the guys from 20 years ago got, but we are not being held responsible for those legacy costs either.”

The pension reduction enabled them to negotiate a major pay scale change from a 10-year to a 5-year top out. “Nobody wants to see a pension reduction, but … we now have officers getting a $5,000 to $6,000 raise in the first year,” Watts said. “I think we’re going to be successful in the future bringing them up to one of best paid departments in Genesee County. They’ve been so stagnant — They had not seen a substantial wage increase for several years. In fact, they’ve gone backward. Every little bit of money afforded to them was being thrown back into the old pension.”

Effective July 1, 2018, the top pay for officers who have served five years at the department is $56,000, a $4,210 increase. Those in years one through four will receive about a $2,000 pay increase, Watts said. “We actually negotiated them a rather good bump in their pay,” Watts said. “Some of those patrolmen, who were not slated to top out for 6 or 7 years, are making a considerable amount of money right away. There were guys that only got a $2,000 pay step increase, but it was four years earlier than they expected.”

“One of the nice benefits was I’m one of the older officers and I received a pay increase and it was restructured,” Mahon said. “Now it’s a five-year top out and that attracts a lot of new employees, which is a lot of better condition for the City. We’ve had a hard time recruiting new officers because we were at the bottom of the pay scale for where we live. We have fought pension issues so long our wages basically froze,” Mahon said.

Their morale change is two-fold with Watts readily available to members and a contract that improves conditions for the police and the City. “He always says he can be contacted anytime, which we didn’t have with the POAM,” Mahon said. “(The POAM Rep.) was on west side of the state — it was real difficult to have those POAM reps come out to our city. With Chris he shows up when he says he will. We’ve seen him a lot around the office. We’re really happy with Chris.”

They were especially impressed when Watts checked in with them following an officer shooting in Genesee Township. “He called to ask if our guys were ok,” Mahon said, adding the incident, as it turned out, didn’t involve Burton Police.

Mahon said language in an early 1990s POAM settled contract set them up for failure. The contract stated that Tier 2 Employees would assume all the costs of Tier 1 Employees’ pensions once they retired. “If we didn’t have that wording in the contract, we would have been able to fight free of it a long time ago,” Mahon said. “That might have been the only thing we wanted was to remove that wording from the contract. The Tier 1 Employees didn’t dump the money into the pension at the beginning and officers were retiring one or two years after the pension plans inception. That’s what hurt us.”

“There were poor business decisions on both sides of table,” Watts said. “Years after the pension was started, the newer Employees were forced to pay for this unfunded pension problem that wasn’t even their problem. It was a really sour pill to swallow.”

“We had guys that were lining up to walk out the door because the wages were so far behind everyone locally,” Watts said. “Burton is a busy department and they deserve to be paid. Officers are making more money quicker and (the City) becomes more marketable to new officers because they don’t have this 10-year waiting period to top out.”

The four-year contract expires June 30, 2022 and has wage and DC re-openers the last two years of the contract.

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