newsworks.org | Illinois pension reform group sweeps into Philadelphia

Findings from TUA’s pension project on Philadelphia are featured in this article at newsworks.org.

A tax-reform group from Illinois is advocating for sweeping changes to state and local government pension programs by making an example of top-earning former Philadelphia municipal employees.

Retired Philadelphia Police Commissioner Sylvester Johnson tops their list with an annual pension of over $150,000.

The group, Taxpayers United of America, hopes knowledge of the high-end figures will energize the public to rally against what it sees as a corrupt and unsustainable tax-payer-supported government retirement program.

Included among those they’d like to see advocating on their behalf are the lower-earning members of municipal employee unions themselves.

“The rank and file are playing by the rules that unions and politicians have made, and they’ve been used as pawns,” said Rea Ann McNeilly, Outreach Director of Taxpayers United of America. “These pensioners, who work hard for their money, will one day go to the mailbox and there just won’t be a check.”

The idea of pension reform is not news to Philadelphia City Hall.

The city’s pension fund — which is paid for both by contributions from employees and by city tax payers — has been underfunded for years.

At this point, the city is so in over its head that it only has money for half of the pension payouts that it owes. Basically, it has around 4 billion dollars for an almost 9 billion dollar tab. (And this is actually an improvement over last year’s estimates).

Blame for the shortfall can be widely placed: imprudent labor deals past, the spike in baby-boomer-generation retirees (there’s currently more municipal retirees than there are workers), the 2008 stock market crash.

But, according to city finance director Rob Dubow though, the time for blame is gone.

“We’re at a place that — however we got here — we really can’t afford the level of benefits that we’re providing.” said Dubow. “The system we have now doesn’t really work for taxpayers and in the long run it won’t work for employees either.”

Ten years ago, about $200 million of the city’s annual budget went to pension pay outs. Now over $500 million does. Here Dubow points to the obvious: the more that goes to pensions, the less that goes to city services such as parks and recreation and the streets department.

The Nutter Administration says the only way to close the pension gap is by renegotiating labor contracts with the city’s two non-uniformed municipal-workers unions: District Councils 33 and 47. The former represents roughly 10,000 “blue-collar” workers, and the latter roughly 3,000 “white collar” ones.

As of now, the city and the unions are at loggerheads. The city says the pension system can be salvaged if the unions agree to a few key changes. They want current municipal employees to contribute a higher percentage of their salaries to the pension fund. And they want new hires to accept a “hybrid” retirement package that would include a limited taxpayer-supported pension, as well as an employee-supported savings fund such as a 401k.

Current retirees would continue receiving their benefits as contracted.

The unions have not bit on the deal, and — at least in the short term — have suffered for it. They haven’t received pay raises since 2008.

The Nutter administration maintains that it won’t renegotiate contracts until the unions agree to drastically reform the pension system.

Union officials claim that they shouldn’t be held responsible for what they see as the city’s poor financial management.

“They’ve gotten into this jam because of their actions,” said Bob Bedard, spokesman for district council 47. “The city didn’t put its share into the fund, and while they’ve skipped payments, the union members have continued to pay their share.”

Bedard also pointed to the fact that, historically, pensions have been government’s way of attracting top talent to lower paying public sector work.

“Generally, people who go to work for the city get paid less, but cities make employment attractive by offering more holidays and better benefits than private sector positions do,” said Bedard. “And now they’re trying to pay us less and cut our benefits because they run a bad government.”

Despite the unions’ displeasure with the Nutter administration’s plans, the prospect of a strike does not seem to be on the horizon.

“Being in an unhappy situation is better than being in a worse one,” said Bedard. “It’s hard to make up the money you lose by going on strike.”

Taxpayers United doesn’t think that city residents should be satisfied with the prolonged standstill.

“Somewhere along the line those negotiations have to be made and if these people don’t make the deals that fix the problem, the solution is to vote them out of office,” said McNeilly.

Below is a list of some of the city’s top pension recipients, including how much they earn in yearly pension, and how much they personally contributed to the fund during their tenure as city employees:

Sylvester Johnson: (Former Philadelphia Police Commissioner) Annual Pension: $152,440. Personally Contributed: $78,671.

Vincent Jannetti: (Former Financial Oversight Director) Annual Pension: $133,097. Personally Contributed: $84,134.

Dominic Sabbatini: (Former President of Penn’s Landing) Annual Pension: $131,206. Personally Contributed: $105,110.

Harold Hairston: (Former Fire Commissioner) Annual Pension: $125,921. Personally Contributed: $73,172.

John F. Street: (Former Mayor and City Councilman) Annual Pension: $116,387. Personally Contributed: $48,175.

Lynne Abraham: (Former D.A.) Annual Pension: $107,091. Personally Contributed: $141,476.

Augusta Clark: (Former City Councilwoman) Annual Pension: $99,196. Personally Contributed: $71,019.

The average annual pension paid to a city employee in 2011 was $18,148.