City, retirees, unions reach pension deal
The City of Cincinnati has reached a deal with the unions of current employees and with retirees over the pension fund. Unfunded liability in that account had been estimated at $862 million, according to a release from the city. But now, Mayor John Cranley says the settlement reached late Tuesday night will mean the pension system will be fully funded.
“This is a historic agreement. I think it’s the biggest deal the city has made since the historic collaborative agreement, back in 2002, and it will secure the city’s financial house,” said Mayor Cranley. “It will guarantee that the pension will be there for current workers, for future workers, and today’s retirees.”
US District court Judge Michael Barrett oversaw the agreement. He called both sides to the table, Tuesday afternoon for final negotiations. The settlement comes after nearly ten months of discussions between the sides.
The agreement calls for current employees and retirees to take a three year cost of living adjustment holiday, and shifts $200 million from the health care trust fund to the pension fund. The cost of living adjustment for retirees and current employees will switch from a compound interest plan to a simple 3% increase.
The city will make a larger contribution each year to the pension fund.
It’s not clear where the city will come up with the money for the larger annual contributions to the pension fund, but Cranley says it will not mean higher taxes.
“This settlement requires some sacrifice on all sides, but it will help strengthen the city’s financial health and ensures the pension system will still be there for everyone in it,” said Cranley.
Sean Grayson represents members of the AFSCME union and said “We’re elated that we were able to reach this agreement that is going to stabilize city finances, is going to guarantee benefits for retirees and for our members who aspire to be retirees, in a way that’s fiscally responsible.”
Mayor Cranley says the threat facing Cincinnati from the under-funded pension system could have hurt the entire region. “And now that threat is gone,” he says.