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Cincinnati Council to discuss pension mediation Monday

Cincinnati Council's Budget and Finance Committee holds a public hearing Monday on a plan to let a federal judge mediate a solution to the city's pension crisis.  

Without major changes, at some point in the future the city's pension system will not be able to pay the benefits promised to retired city workers.  There are two ways to fix the problem:  infuse more cash into it or cut the pay outs to current retirees.  Some combination of those two efforts could also be used to stabilize the system.  

City councils have made short-term fixes in the past, but there has never been a permanent solution.  A court mediated settlement could be the answer.  

Some current city workers filed a federal lawsuit in 2011 after city council approved pension changes that modify future retiree benefits.  U.S. District Judge Michael Barrett is handling the case and would lead the mediation.  Such an effort would be similar to the collaborative agreement from 2002 that settled a number of racial profiling lawsuits filed against the city.

Mayor John Cranley introduced the proposal last week during a press conference at city hall.  He said he has been working on a solution to the pension problem since taking office on December 1st.

“If we can get a negotiated settlement in federal court where the current retirees in essence agree to changes in their COLA (cost of living adjustment), through a negotiated solution,” Cranley said.  “And Judge Barrett’s able to certify that as a mandatory class-action, then the result would not only solve the financial solvency issue, but it would stick legally.”

Cranley said a binding court settlement could be the solution officials have been seeking for years.

“Which would deliver finality to these discussions,” Cranley said.  “Allow us to save our credit rating, allow us to show that we will be 100 percent funded within a decade or two.”

It appears Cranley has the five council votes to approve the ordinance that would allow the court option to move forward.  The mayor wants a decision by mid-week.  

Two bond ratings agencies will be visiting the city on Thursday and Friday to review the city's finances.  The city is expecting its bond rating to be downgraded meaning it will cost more to borrow money.  But Cranley believes if the agencies see a possible long-term solution to the pension system problem, the downgrade may not be as severe.

Lots of contentious issues could be involved in the negotiations including cost of living adjustments and health care benefits for retirees, and how much the city is required to contribute to the pension system each year.  The latest plan could also transfer $100 million from the health care trust of the retirement plan to the pension side to help with the current shortfall.

Jay Hanselman brings more than 10 years experience as a news anchor and reporter to 91.7 WVXU. He came to WVXU from WNKU, where he hosted the local broadcast of All Things Considered. Hanselman has been recognized for his reporting by the Kentucky AP Broadcasters Association, the Ohio Society of Professional Journalists, and the Ohio AP Broadcasters.