Because I thought the statement said there are 30,000 --
How many are from the City of Philadelphia itself? 32,000?
I would just be guessing at that Councilman. But the general fund is just the bulk of the funding over the years. The Aviation and Water have a small percentage, but they are all members of the fund.
Can you get members roughly of the others, the Aviation --
Sure. Sure. It is probably around 85, to 86 percent of the entire amount the general fund employees.
What are the other 408 11/30/98 - WHOLE - BILL NO. 980789 agencies?
Water Department employees do not get check that say "City of Philadelphia."
No, they do. But the Pension Fund looks at them as different, because they are paid out of the Water Fund, their contributions. They are differently. So it is General Fund, Water Fund, Aviation, Parking Authority --
I don't know how many employees are in the Department of Aviation --
Of the different government bodies who are involved in the City of Philadelphia's Pension Fund. 409 11/30/98 - WHOLE - BILL NO. 980789
Whether they are City of Philadelphia employees or not, just say the City of Philadelphia, how many retirees are from the City of Philadelphia; how many from the Aviation Fund; Water Fund and every other fund? Does gas works come under the City of Philadelphia?
That's an interesting question. The answer is we would like to think they are. And the review of the PGW Pension Fund is something we need to do very soon. But in most areas, the answer would be, yes.
Right now there is no 25 unfunded liability for the PGW Fund. 410 11/30/98 - WHOLE - BILL NO. 980789
Oh, yes. It's a different actuary but the same actuarial standards, yes.
You stated in here that the City pays out -- the pension fund pays out $33 million each month for benefits currently.
And how much of that money comes from contributions from the various employees covered say currently? How much of that $33 million is amended by employee deductions.
There is about -- there is about 40 some million. I have to double-check with the actuary. The exact amount comes in every year from employee contributions.
Why do you have an item saying about 56 million was the normal contribution of the City? Why is that a separate number than the unfunded liability? For example, on , you say "53.6 million (normal cost) plus 193.7 million unfunded."
Of to 247 million the General Fund paid into the pension this year, about 53 was paid for the pensions of our current employees. If there were -- if there were no 15 unfunded liability, that's the number you would have paid. But because of the enormity of the unfunded liability, an additional $193 million was paid, the two of those should come to about 247 million.
Can you give us a simple example of when the unfunded liability would come into play? For example, from the various -- did we this past year increase the money in the pension fund from what it had been 412 11/30/98 - WHOLE - BILL NO. 980789 the year before?
So from all sources that the pension fund received income, more came in than went out; is that right?
No. The contributions we have to take dollars down from the Corpus Fund, we have to sell securities in order to meet approximately 390 million this year that will be paying out. The external, what we call the external contributions, which is the City's contribution and General Fund, then there is dividends and interest on the investments which is cash -- not equity driven. Because the stock is up. It is on paper. It doesn't do anything from the retiree's check. It is only the cash. So the dividend's interest is a much smaller return to fund. It is only about maybe to percent. You add that up, you then have to take down -- you have to sell securities over the period of the year in order to make your $32 million a month. So you have to plan your cash flows. So the external contributions are very important. 413 11/30/98 - WHOLE - BILL NO. 980789
I just find it impossible to comprehend how a pension fund, which I understand now has about $3.2 billion dollars in it and which, when I came back to council in 1980, had only a half billion dollars, how an unfunded liability that has enormous growth -- and I think there are fewer employees now than there were in 1980 -- I just can't understand how the unfunded liability can be so great when we are taking in more money than we are putting out every year. What does "unfunded liability" mean?
Yes. This is Kenneth Kent again, from Mercer Incorporated, the actuary to the pension fund. The unfunded liability -- first of all, first we start with a liability. The liability reflects the basic contract between the fund and the City employees to provide them with benefits for those for are retired and also for 414 11/30/98 - WHOLE - BILL NO. 980789 those who are active, and the best representation is for the service of your active employees. Up to the present so there is a liability to provide them with retirement income either currently or when they come up to retirement. And then we have the assets of the fund. When we compare the assets to the liability to the extent that liability is greater than our assets, that difference is our unfunded liability. Okay? So that's what we mean by "unfunded liability." Is that clear or --
Well, I hear your words. But I am confronted with fact that we paid out -- say if it were $33 million each month. We paid out about $400 million last year, assuming the figures were the same, and it may have been a little bigger or a little smaller. We have a kitty of over 3 billion, and a kitty that seems to be growing all of the time because it is multiplied at least six times since 1980, it seems to me that there is no unfunded liability, that the pension fund is enormously strong.
Let's start with one piece 415 11/30/98 - WHOLE - BILL NO. 980789 first. We have 32,000 retirees receiving payments. If we were to just close the books on those 32,000 retirees, we would need about $3 billion of assets sitting in a bank which would generate sufficient income and draw down the principal to pay those 32,000 retired participants for the rest of their expected lifetime. Okay? Then we have active participants who through their service with the city have accrued benefits; they, too, create a liability which is about $2.4 billion. So if we were to stop the fund and cover just the benefits they've earned to date, we need $2.4 billion. The assets are not sufficient to cover both of those.
But this is all based upon an assumption -- I don't see how it could ever come through. You are talking about a liability that would be imposed if the city government went out of business. And I can understand that kind of principal to a private enterprise that may, you know, have problems. But I don't see governments going out of business. And the City of 416 11/30/98 - WHOLE - BILL NO. 980789 Philadelphia, particularly, I don't -- I just can't understand why we are compelled to put so much money aside for an event that will never happen I think in anybody's lifetime in the city who lives for a couple of hundred years and I would expect don't expect to live for much longer. It seems to me that this is just a pipedream that we are talking about. What makes it necessary that we do this?
State Legislation Act 205 which compels and requires the City to adequately funds the benefits using sound actuarial principles.
And it is the same principles that apply to private enterprise that are applied to the government?
They are different principles but very similar in form. Okay? But the State of Pennsylvania has set up its own schedule. And the purpose of that is because before 1985, when the actual fund was passed, there were many cities that were doing just what you suggesting; they were making sure there was 417 11/30/98 - WHOLE - BILL NO. 980789 enough funds in the plan to pay out the benefits during that year. And the problem was that if there was a downturn in the City's ability revenues or those revenues did not grow at an accurate level, the City would find that there is not enough money in the fund to pay those benefits, and they were strapped with having to come up with a general road. That it is not a sound actuarial approach to funding the plan. The State legislated an approach which obligated all municipalities to meet as a minimum municipal obligation a certain level of contributions.
Does the State Pension Fund have to meet the same test we do?
I think the State is fully funded and legislation is similar. But Act 205 is specifically for the municipalities.
And the State also has, as I understand it, a COLA that applies every year? 418 11/30/98 - WHOLE - BILL NO. 980789
No? These school district employees or state employees, does anybody have any information on that? I would like to know what group of public employees in the Commonwealth of Pennsylvania enjoy the annual COLA that we talked about.
My name is Joseph Miguel (ph) Executive (unintelligible) of PICA. There is no state -- either state teachers or the state employees -- pension plan that do not enjoy a COLA. What Councilman -- what you may be referring to is a General Assembly during the spring session did pass a pension supplement so that employees, given different longevities of state service, were entitled to an increase in their basic pension benefit. But there is no 419 11/30/98 - WHOLE - BILL NO. 980789 COLA from any state employees, be they members of the School Teachers Retirement System and the State Employees Retirement System.
Because we ask that you get that information. Because we are told that there are health benefits that are not available to city employees that are available in perpetuity following retirement. There may be a requirement that the employee had worked a set number of years --
I mean, the only ones I know from firsthand experience are judges. But that's because...
Councilman, the teachers system does not have health benefits after retirement. I am not sure about the regular public employee system.
You say that's why it -- 420 11/30/98 - WHOLE - BILL NO. 980789
Excuse, me Councilman Cohen. I don't want to be unduly restrictive of your right to ask questions --
Well, if you make your motion, I will ask for a quorum.
Do you choose, Mr. President, to be the questioner today? Because I took my light on as soon as the witnesses began and there has been unlimited questioning and I think very relevant questioning.
I don't mean to 421 11/30/98 - WHOLE - BILL NO. 980789 suggest that you won't have another opportunity to question this --
I don't know. After Jim Kenney sometime. He's next. You know, I just thought maybe we could move it around a little bit.
And request the floor after he finishes. I don't want to hold him up.
We actually have a quorum here, too, by the way. The Chair recognizes Councilman Kenney.
Thank you, Mr. President. I won't be long. Just a couple of comments. First, with due deference to Councilman Cohen, said he doesn't remember seeing, he only had a business any time lately -- 422 11/30/98 - WHOLE - BILL NO. 980789 I know his memory is good, but he must have forgot 1991. Because I think we were as close to going out of business as any city in business ever was. Secondly, I agree totally with Councilwoman Blackwell that the issues in dealing with refinancing and with recertification do directly relate to the other issues that we are going to do with on the set. And while I recognize and agree with Mr. Hayllar that unless we refinance and pass this bill, this financing bill, there will not be the ability to deal with any of the issues that we are going to have to wrestle with on the 7th. Having said that, I would ask that this panel, this group, and the administration in wrestling with this COLA issue, both from a uniform and ultimately a non-uniform perspective deal with the issue of those people who are truly in need. And the reason I raise that is because I was first intrigued and interested in the uniformed COLA request based on information provided to me dealing with people who either 423 11/30/98 - WHOLE - BILL NO. 980789 retired back in the mid '70s or who were widows or retirees back in the mid '70s, who are experiencing a serious struggle in providing for their monthly needs of housing and medicine and food and other things. And I am not prone from an ad hoc perspective to be giving the universe dollars that may be the universe doesn't need. Those people who are truly in need who are struggling, who are widows, who are elderly, who have retired 25, 30 years ago, under a system and under a monthly payment plan that does not meet their needs today are my main priority. And I am not saying that the ad hoc -- your ad hoc plan has not been really spelled out for us yet, is not a good thing or not an effort to try to address some of those concerns. But as I said to you earlier, if we can begin to try to target from the first priority, those who are struggling to live every month and then move on from there, that is something that is very much in my interest that I am willing to note. I recognize that there will be 424 11/30/98 - WHOLE - BILL NO. 980789 disputes between the uniformed employees and non-uniformed employees, the City, the Pension Board on what we really can afford or really can't afford, and I guess ultimately we will have to make that decision on what is affordable. But with the priority being those elderly, those widows, those people who work, who cannot work, who cannot get another job, who are disabled, those people who truly need the help first and then move out from there is my priority. And I would just would like you to consider that as you move in -- as you wrestle this very difficult issue. Thank you.
Thank you very much,. The Chair recognizes Councilman Nutter.
Thank you, Mr. President. Just briefly, there was mention made about the utilization of the net proceeds going to the pension system. Councilwoman Clark raised an issue about one component of Mr. Hayllar's 425 11/30/98 - WHOLE - BILL NO. 980789 testimony having to do with the segregating of about 80 to $100 million, I believe for small or sometimes called emerging firms. What do you plan to do with the rest and how will that be split up among, either the current fund managers, or do you anticipate increasing the pool of fund managers for this now close to $30.
We basically would allocate it in proportion to what the current managers have and keep the same asset allocation plan, which is not based on managers particularly but a certain percent in international equity, a certain percent in national equity and so forth. And we would replicate that asset allocation using the current managers.
Once you get your asset allocation though, you will have to make some decisions about which managers the money goes to.
Yeah. The current manager will receive the funds in the same proportion as they have now to keep the asset allocation plan intact. 426 11/30/98 - WHOLE - BILL NO. 980789
Within his increase pool of dollars -- I forget what page it was, either or in the folder I was 5 referring to -- you talked about the fund being 6 able the increase the return because now you have 7 $4.4 billion in assets? 8
Do you anticipate 10 any changes in the asset allocation? We had a 11 little bit of discussion about the fund's return, I think in comparison to various indices; we may be over, we may be under. Do you anticipate making any asset allocation change based on an increased amount of funds to the vest.
No. It would be approximately the same plan we have now. The board is currently doing an annual review of that. It may tinker with it around the edges, but it is fundamentally going to be the plan we currently have.
How does our asset allocation compare to some other cities across the country and what their return were.
I will let Ms. Parker 427 11/30/98 - WHOLE - BILL NO. 980789 deal with that. Because we have been unfunded, we have taken a balanced approach because we have a fairly large state in fixed income to protect us in case there is a downside, a slide in the market. We are predominantly in equity, a good, strong fixed income approach. We do have an allocation in emerging markets, countries that are marked where there is growth in their economy, that might be unusual compared to another fund. We have real estate only in those investments that were made in the past. We have not made new invests. We are trying to wind that down. So there are some peculiarities in our plan. It is dissimilar to other public funds. It is conservative and it is designed to reach better than the 9 percent that is our actuarial assumption.
You were going to have Ms. Parker respond on something?
Our S&L -- Sandra Parker again. Our S&L allocation is pretty similar to what you find in most large public funds. And ours is considered large, because it's well over 428 11/30/98 - WHOLE - BILL NO. 980789 a billion dollars. In terms of our returns, in comparison to the public fund universe over a one-year period in the 40th percent file and over three years in the 62nd percentile.
The last time I really had to deal with percentiles was probably my SATs or something.
If you are top 40, you are doing better? MS. PARKER; exactly.
For one year you're in the 40th; for three years, we are in 62nd.
Oh three years. 429 11/30/98 - WHOLE - BILL NO. 980789 Okay.
Sir, after the year 2020 when the pension payments would be cheaper without the pension obligation bond, can the pension obligation bonds be refinanced to create greater savings? If not, aren't we creating the savings and pension plan payments that year in exchange for even greater payments?
The answer to your first question -- and I didn't understand the second part. The answer to the first question is -- the answer is yes, we can refinance.
We won't give you that much job security. Are you needing a recommendation? 430 11/30/98 - WHOLE - BILL NO. 980789
I think it is something that the City will always have to look at to make sure it is the greatest value in. With a taxable deals, there is no limit to refinancing, the constraints on tax incentive deals. It is something that the City will always have to monitor.
What is the interest rate the bonds are going to be paying.
We project that it will be somewhere in the facility -- the vicinity of 6 and three-quarters percent.
And that is much higher than what we paid, from what I remember, from all of these hearing. Can you tell me why?
It is taxable. The rates are higher because these are not tax incentive bonds, by their very nature.
Have we issued taxable bonds before? 431 11/30/98 - WHOLE - BILL NO. 980789
I am sure we have. Not in their lifetimes. But maybe there may be an indication.
Right. My name is Thomas Queenan, the City Treasurer. I don't think the city has issued taxable bonds since 1992 that I am aware of.
Because the IRS requires that this type of financing be done on a taxable basis because of the use of proceeds will go into equities, fixed income. They believe that requires a taxable rate. We're fortunate that the current market that the rate is so low for taxable. There have been challenges to this, but so far the IRS is ruling that these pension obligation bonds are taxable holds.
By "taxable" it means that investors of these bonds will have to report their income. 432 11/30/98 - WHOLE - BILL NO. 980789
So these are not the usual government tax-free obligations?
But the cost of the pension fund as a result is much higher, right? Aren't we issuing bonds at the rate of 4 and a half or 5 percent down.
Well, if we could do it at a taxable rate, the interest rate, if we could do it at a tax incentive rate, the interest rate would be lower. But there is no cost to the pension fund; it is the City that will pay the debt service. And we are trading our obligation to the pension fund for a lesser obligation on these bonds as demonstrated in that chart. But the pension fund does not pay the debt service on these bonds. We do, the participants in the fund.
Thank you very. Is there any other member who wishes to ask any 433 11/30/98 - WHOLE - BILL NO. 980843 question of these witnesses? Are you sure? Seeing no one, we will ask these witnesses to maybe take an appropriate seat where you can quickly come to the microphone if we need you. Are there other people in the chamber who wish to testify on these bills? Is there anyone else who wishes to testify on these bills? Seeing no one, at this time, we are now getting ready to consider Bill No. 980843, which is an ordinance adopting a comprehensive new pension plan for city employees by restating and amending the Retirement System Ordinance 17 approved December 3, 1956, as amended, and the Municipal Retirement Benefit Plan 1987 Ordinance, which became effective January 8, 1987, as amended, and by combining them in one comprehensive ordinance, to be codified in the Philadelphia Code.
Good evening. My name is Ben Hayllar, Director of Finance. I serve as Chairman of the Pension Board. With me is Joe 434 11/30/98 - WHOLE - BILL NO. 980843 Herkness, Executive Director of the Board of Pensions and Deborah Butler, Chief Deputy City Solicitor. We are here to speak in favor of Bill 6 980843, which constitutes a long overdue recodification of the City's retirement system. Since 1995 --
Excuse me, Mr. Hayllar, I apologize for this, but I have been informed that the stenographer needs a five-minute break. And on that basis, we will take a five-minute break. I will ask councilmembers to please don't go far. (Brief recess.)
I think I got through the introductions. We are here to speak in favor of Bill 19 980843, which constitutes a long overdo recodification of the City's retirement system. Since 1995, a committee comprised of representatives of the City Board of Pensions and Retirement, specifically Mr. Herkness, the Office of City Council, specifically Tom Erickson (ph), the City Law Department, Deborah Butler and Evan 435 11/30/98 - WHOLE - BILL NO. 980843 Myer and outside counsel John Nixon from Blank, Rome have been working on this ordinance. They had three tasks: First the combine into a single ordinance the many provisions and amendments that currently make our pension plan, secondly, to make certain that the provisions of our plan comply with the Internal Revenue Code of 1986, and finally, we felt that the several changes needed to be made in the pension plans so that provisions within the various plans were uniform. Each change enhances the benefits enjoyed by participants and, therefore, incurs an additional cost to the City. These provisions in the recodification will cost the City approximately $1 million a year. All changes are noted in the attached memorandum to my testimony; however, some of them should be noted here. We propose that military time be purchased by anyone who has an Honorable Conditions Discharge, currently the City requires that military time be purchased by people who have separated from the military with an honorable discharge. 436 11/30/98 - WHOLE - BILL NO. 980843 Honorable Conditions is a separation classification for people who are willing but unable to complete their military service. e. military pension -- under honorable conditions, we do not believe the City should require a stiffer standard. We do not believe that life insurance benefits through a City program should reduce the individual's ordinary death benefit. The ordinance corrects this. We believe that partial credit for service purchased under an installment plan that was broken should be allowed; the ordinance allows this. 2 percent of the employee contribution depending on the participant's age. Likewise, elected officials who serve four-year terms would be able to vest under the earlier of eight years or on completion of two terms and would pay an appropriate increase of 437 11/30/98 - WHOLE - BILL NO. 35 percent of their employee contribution. In these cases the change in the vesting would be entirely paid for by the individual. Finally we believe that the definition of "government service" that may be purchased should be expanded to cover any level of federal, state or local government. Currently only military time and time served within a unit of Pennsylvania government can be purchased. Currently, the pension fund is vexed with inconsistencies between plans. The recode seeks to make these systems uniform. For example, the time limit on the purchase of service will be set so that applications for purchases not made with one year of hire can be purchased but at a rate of 9 percent thereafter. No longer will individuals in various plans be unable to pack purchase time simply because they missed the deadline that they weren't sure of. Redesignation of the supervisor, if the originally survivor dies before the member's retirement is allowed for all plans on the recode. 438 11/30/98 - WHOLE - BILL NO. 980843 Currently Plan 56, but also known as Plan 67, does not provide for redesignation of the survivor in the event the originally designated survivor dies before the retired member. Currently Plan 56 or 67, espoused does not have to be living with a member at the time of his or her death to collect an ordinary death benefit for service connected death benefit, yet the spouse must be married and living with the member to receive a service connected death benefit under Plan 87. The ordinance before you would make the two plans consistent by adopting the Plan 56 standard.
In the recode, employees who are transferred are promoted to non-represented positions, are allowed to count past overtime credits toward their three years used in computing their pension benefits. Currently, the employees who are transferred are promoted to such positions where overtime is not credited, lose that overtime, and their pension calculation. This inconsistency would be corrected in the recodification ordinance. 439 11/30/98 - WHOLE - BILL NO. 980843 More over, the recode provides that members not entitled to be represented by a union may include over time in the calculation of their pension benefits. There is a cost of approximately $625,000 over ten years to this benefit. This is incidentally the bill that Councilman Mariano has also presented to Council. The forfeiture of a pension for criminal activity would how conform to Pennsylvania law. Finally. , have been interested in having the pension provide what is known as a deferred retirement option plan, a drop plan which is found in some municipal pension plans, would be designed by the Pension Board and tested for three years. After an actuarial evaluation, if the drop plan does not cost the City or the retirement system anything more than an immaterial amount, it would be continued. If it costs more than the material amount after the evaluation, the test period will be ended except 440 11/30/98 - WHOLE - BILL NO. 980843 for those who are enrolled. A drop program allows employees to announce that they will be retiring in three years. At that point, the City ceases to contributions for that participant saving money. Simultaneously while the participant continues on the City payroll, the pension fund begins to pay that individual's pension benefit into an escrow account. At the end of the three-year period, the individual separates, or retires and is able to accept the monthly pension payment as well as the amount that has been entered into the escrow account. We believe that such a program can be designed for employees who wish it, without costing the fund or the retirement system any money. Fundamentally, this recode places under one document the many fragments of pension law that have been enacted over the years and makes it conform for the IRS requirements. Other elements of the recode are detailed in the attached memos I provided. We request that Council approve this bill with the waiver of the rules. And I would be happy to 441 11/30/98 - WHOLE - BILL NO. 980843 answer any questions. I believe, also there are a couple of technical amendments that Ms. Butler has that we may wish to get to in minute. Thank you.
Thank you. Good evening. My name is Deborah Butler. I am Chief Deputy City Solicitor for the Commercial Law Unit at the Law Department. I am also General Investment Council for all of the City's pension funds, and I am chairperson of the committee that worked on this project. We started this project in 1995 as a Tax Qualification Project. The City's pension fund's tax determination letter is dated 1961. So we started this project in order to update the City's pensions fund tax determination letter. It just so happens that all of the pension bills had hit the council around the same time. But this was originally a project that started in the law department as a Tax Qualification Project. And once we started this project, we understood that Tom Erickson was working in Council President Street's office to codify and rewrite the pension ordinances in 442 11/30/98 - WHOLE - BILL NO. 980843 order that they can be user-friendly. So with that introduction, I would just like to briefly walk through the amendments, very technical amendments, that we would like to go through today. There are just four of them that are just four of them. And Council President Street, if we could have a Sergeant-of-Arms, I can distribute the appropriate copies, please? The Sergeant-of-Arms will be distributing a sheet with just the proposed amounts, and then there will be a second sheet with bullet points that will have a brief explanation of the amendment.
Yes, they are numbered exactly the same. The first amendment requests an amendment to Section No. 1, which is the entire codification of the bill, to insert an item in the table of contents, Section 22-807 Interest. The second amendment also requests an amendment to Section 1 providing that Plans A, B, 443 11/30/98 - WHOLE - BILL NO. 980843 L, Y and Plans D, J and X have the opportunity to buy leaves of absence after the current time period that is provided in the code. This will equalize the opportunities between the 56 Plans and the 87 Plans. As you know, it has been a goal of the Recode Committee to try to uniform the two plans as much as possible. And this section does that. This was just an oversight by the committee. The third amendment -- the third amendment provides the actual language for that provision amending Section 807-201-B. And you will see in the underlined section of the annotated handout the addition that is being made to that section. And the final amendment is to add a subsection of a reference in Section 22-302 to add 22-301-1C and 301-1D. The reference to 301-1C is to five-year vesting, and the reference to 301-1D is to Plan L vesting. So again, these are very technical amendments just adding some language to prevent any confusion oversights or misinterpretations of 444 11/30/98 - WHOLE - BILL NO. 980843 the statute.
Does anyone have any questions? I see no one. The Chair recognizes Councilman Nutter.
Actually, this involves a proposed amendment as well. In the briefing that we have on the recodification issue, you had actually asked a question with regard to any possibility of benefit, additional benefit to anyone that is currently an elected official. When I read through the documents, the section on the eight-year vesting, for a lack of officials, I would ask the law department to take a look at that from the perspective of there are a couple of Members of Council who would potentially be affected by the eight-year vesting provision. And even though we would be required to pay additional funds to vest an eight years as opposed to the current ten years, there is an outstanding either legal question or argument 445 11/30/98 - WHOLE - BILL NO. 980843 that some of us could, in fact, take advantage of something that is not available to us today. Those councilmembers are Councilwoman Blackwell, Councilman Kenney and myself. No other member would be affected directly by that particular provision. It has to do with the fact that we have about seven years. All other members either have more than eight years or less than four. So I would ask the law department to draft an amendment that would essentially prevent the three of us, at least in the body -- there may be other elected officials, although I am not aware of them, with the exception of possibly Election Official Commissioner Tammage (ph). That would prevent us from taking advantage of the eight-year vesting during our current terms of office, and that we would only be able to take advantage of it after the next election or actually the swearing in in January of the year 2000. I've had a discussion with my two colleagues about that, and they don't have any problem with it. 446 11/30/98 - WHOLE - BILL NO. 980843
If it would please Council President Street, we have amendments that we can distribute to Council, and there is an annotation.
Thank you, Councilman President Street. We would ask that these amendments be incorporated into Bill 843.
I would like to ask the councilmembers to hold onto these amendments. We won't have a public meeting this evening. But we do have a public meeting, we will need the amendments. Does anybody have any other questions? The Chair recognizes Councilman Cohen.
Mr. President, I would like to offer two amendments that are proposed by District Council 47. 447 11/30/98 - WHOLE - BILL NO. 980843 One seems to be an amendment, a very equitable amendment, in the changeover to Plan 87. There were certain members of Local 2187 who became promoted and became supervisors and, therefore, changed their affiliation to local 2186. There was an arbitration involving all of the employees of 2187, and I think there were similar arbitrations involving other unions that did not want to go under Plan 87 and wanted to stay in Plan J. And the arbitration was decided in favor of all of the employee unions. I think there were separate arbitrations, but the results were all the same. But a group of employees in 2186 who got into the supervisory level beginning sometime late in '87 throughout until the end of December '92 were never permitted to stay in Plan J. They were compelled to go over to Plan 87. They are the only group. The rest made it about 20 -- I am certain there couldn't be anymore than 25. There may be some less than 20. I have a list, I think, of 25 names. That is the best estimate of 448 11/30/98 - WHOLE - BILL NO. 980843 District Council 47 covering this group of employees. And I would like to distribute or have distributed the amendments that would be needed. Apparently different sections of the current law have to be amended to permanent this small group of to people to go into Pension 9 A -- J, who returned to Pension J. They would be 10 responsible for paying the additional costs of 11 the pension fund so that the amendment would be 12 revenue neutral. 13
Councilman, has 14 this amendment been review by the 15 administration? 16
Yes. I think Mr. 17 Hayllar is familiar with the amendments that have 18 been discussed with him and Mr. Erickson of your 19 staff all day long. And I think that there will 20 be no opposition. 21
If the facts are as we 22 understand them to be -- this is an issue that 23 came up very early this morning, and I have not 24 talked to Mr. Grab of Labor Relations -- I think 25 that will be fine. 449 11/30/98 - WHOLE - BILL NO. 980843
Because we will actually -- won't be doing a public meeting today, but we want to make sure that this is not a problem. We understand how pension law is.
You make a mistake in pension law, you pay until everybody dies.
(unintelligible) -- the proposed amendments to council.
I believe also the law department needs to review these amendments, that we have time to do that.
Yeah, that's why it's a good idea to get them -- you know, in the record now and then the law department and finance and revenue and however else has to look 450 11/30/98 - WHOLE - BILL NO. 980843 at them...
Now, the second amendment, which I think may be more controversial, is a proposed amendment regarding vesting within five years. And it is premised upon the fact that -- upon the notion that the five years provided for in the recodification bill to certain exempt employees, that that five-year vesting should be made possible for all employees. And I have a copy of the proposed amendment which I also like to have circulated.
And the administration may have a different point of view.
We would like to have that one circulated and the administration will be prepared to comment on it at the appropriate time.
We believe this to be a part of the whole issue that. 451 11/30/98 - WHOLE - BILL NO. 980843
At the public meeting, I will be prepared to move. This is a second amendment. A different amendment.
At either the continuation of the public hearing or, if not in the public meeting, although that doesn't usually occur, will we have an opportunity to get actual testimony or response from the City administration on the last two amendments.
You were off a beat. The Chair recognizes Councilwoman Verna.
Thank you. Mr. Hayllar, according to this bill 8 retirees who work for a quasi public agency will not be able to collect their city pension as long as they quasi agency's pension plan is administered by the city. What quasi authorities are administered by the city?