The Detroit Police Officer Association (DPOA) ratified a contract yesterday that sets a new national standard for public pension negotiations by reducing the pensions for current officers, something that few municipalities ever thought about touching to save jobs and plug the deficits of most cities — Until now.
“This is a historic agreement for the city and the DPOA,” said Mayor Dave Bing in a statement and in an article printed in the Detroit News. “It shows that we are executing our plan to return the city to fiscal stability by reducing pension costs and doing so through hard work and tough negotiations.” (See Detroit News).
Attorney Ken Wilson of the Fraser Trebilcock law firm, who represented the city in negotiations with the Detroit Police Officers Association, said pension benefits earned by officers so far aren’t affected, consistent with their current contract and the state constitution, but as the officers continue on the job, the retirement benefits won’t pile up as quickly. See Detroit News editorial.
According to the editorial in The Detroit News, this kind of agreement is relatively rare on two counts. First, according to Wilson, it’s the first time in 32 years that the city and the DPOA have reached an agreement without resorting to mandatory arbitration. Second, the pension clauses affect those currently on the payroll.
In addition, future hires brought into the department after a certain date won’t receive pensions at all, but rather the 401(k)-type investment plans now common in the private sector (and among Michigan state government employees hired after the mid-1990s). The City of Detriot will contribute 10 percent of an employees salary to their individual retirement savings plans. These economic agreements will translate to the union representing firefighters as well, under a parity clause, Wilson noted. The agreement could save the city at least $16 million annually in contributions to pension funds, Wilson said.
In addition to the pension and other pay agreements, the city could have more representation on the police and fire pension boards, with an additional mayoral appointee and the city’s budget and finance directors serving ex-officio on the boards.
The agreement would also allow the city to switch sworn police officers for civilian security guards for the 36th District Court in Detroit. The move would allow the Police Department to reassign the officers, placing more of them on patrol duty.
According to the Detroit News editorial, Wilson said he and Joseph Martinico, head of Detroit Labor Relations, worked to develop a negotiation strategy starting last year. He added that an arbitration finding involving the city and another police union, the Lieutenants and Sergeants Association, which contained similar provisions, was helpful in reaching this agreement. In that arbitration opinion, arbitrator Thomas W. Brookover found that police and fire pension obligations threaten the health of the city’s finances, with the combined police and fire pension costs of $150 million constituting nearly two-thirds of the police and fire payroll. Detroit is now paying pensions to 8,424 retirees, twice the number of police and fire officers currently on duty.
According to a recent article in The Wall Street Journal, “Detroit’s drive to reduce its pension obligations had been closely watched as cities and states across the U.S. wrestle with the idea of cutting benefits for current public employees.”
“It shows that we are executing our plan to return the city to fiscal stability by reducing pension costs and doing so through hard work and tough negotiations,” Detroit Mayor Dave Bing said in a statement. Now it is time for others to follow Detroit’s lead.
Author: Fraser Trebilcock