Extra pension benefit OK’d by Council

Local News

September 1, 2010

By Joyce Miles Lockport Union-Sun & Journal The Lockport Union-Sun %26 Journal Wed Sep 01, 2010, 10:02 PM EDT

The Common Council on Wednesday adopted an additional pension benefit for upcoming retirees.

On a split vote, the Council authorized Lockport’s embrace of the “41j” option in state Retirement and Social Security law, which allows departing employees to be paid cash for half of their unused sick time and the other half tacked on to service time for pension calculation purposes. Civil servants’ pensions are based on current/three highest years of salary and the length of time they’ve worked for government.

City Clerk Richard Mullaney used himself as an example how the option works. He’s a 35-year employee with 420 unused sick days as of today. When he retires, the city will “buy back,” or pay him for 210 days, while the other 210 days — almost a year of work time — will be added to his service record.

Effective Sept. 30, the 41j benefit will apply to all city employees except police and firefighters. Once granted, the benefit cannot ever be taken back, an official of the state Employees’ Retirement System advised the city in writing last month.

The benefit will cost the city an extra $6,000 payment to the pension fund next year, the official, Paula Preston, estimated. The charge for the 41j option is 0.1 percent of annual payroll on top of whatever percentage the comptroller is charging municipalities each year to keep the fund flush.

The Council didn’t really have a choice in adopting the 41j option, Mullaney said. The contracts that it struck with the five-member department heads union, and two non-union managerial employees including Mullaney, late last year included the benefit; and according to state law, the city has to formally adopt the benefit in order for the pension fund to pay it.

The sticky part: Once adopted, the benefit applies to all employees, not just those who negotiated it in labor settlements. The City Hall unit of CSEA proposed the benefit for its members but still doesn’t have a contract with the city; the local unit of AFSCME didn’t negotiate for it at all — but members of both unions will get the option now.

“If you do it for one, you do it for all,” Mullaney says he was advised by Preston.

“Unbeknownst to me, at the time we negotiated it,” Community Development Director William Evert, president of the Lockport City Managers Association, hastened to add.

Pointing out the number of beneficiaries would suddenly rise to 135 from seven when that wasn’t the Council’s intent, Fourth Ward Alderman Andrew Chapman asked what would happen if it refused to adopt 41j.

The department heads union “will bring legal action against you. I’ll bring legal action against you,” Mullaney said.

While the labor agreements were struck last year, the question of the city formally adopting 41j didn’t come up until now, as at least 19 employees are said to be exploring the city’s offer of a state early retirement incentive. Between late last year and last month, Mullaney said, no department heads were considering retirement, so there was no immediate need for the city to proverbially dot i’s and cross t’s. Now, at least one managerial employee is looking at early retirement, so the 41j option had to be made law, he said.

Chapman cast the lone “no” vote on adopting 41j. He said he wanted to read the department heads’ union contract first and wasn’t given time before the vote. Second Ward Alderman Jack Smith threatened, in the pre-meeting work session, to vote “no” as well, then changed his mind on the Council floor.

“The fact is, it’s in the (department heads’) CBA. There’s no point in punishing employees for the past mistakes of a previous Council,” Smith, a first-year alderman, said.

The Council earlier this week approved Lockport’s inclusion in the state’s new early retirement incentive “A” for longtime employees excluding police and firefighters. The incentive gives employees one extra month of service credit per year worked, for pension calculation purposes, if they leave the city workforce by Oct. 31. The city will pay a per-retiree fee to the pension fund, and buy out the employees’ unused sick days; and, per state rules, will not replace most of the retirees.

Costs and 2011 payroll savings still aren’t projected, Mayor Michael Tucker said Wednesday; they won’t be until it’s known exactly who wants to retire. Previously, he said, the estimates were up to $200,000 cost and $600,000 savings.

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