|[December 21, 2012]
City of Pensacola, Fla. Mayor Hayward Announces Landmark Pension Reform
PENSACOLA, Fla. --(Business Wire)--
Pensacola Mayor Ashton Hayward announced today a landmark contract
agreement with the police union which includes several major pension
reforms, including the closure of the Police Pension Plan to new
entrants. The closure, along with the other reforms included in the
contract, is expected to reduce the City's more than $100 million
unfunded pension liability by as much as $7 to 10 million or more.
The contract was ratified by union membership earlier this week, and the
City Council approved the deal in a special session this afternoon.
"Over the last ten years, the City's annual pension costs have increased
five-fold to more than $16 million a year," said Mayor Hayward. "That's
more than we collect in ad valorem taxes, and that's simply not
sustainable. Cities across the nation are struggling with this same
issue. Those that haven't acted quickly have been forced into
bankruptcy, or in some cases simply stopped sending pension checks. I
refuse to accept those outcomes for Pensacola. Taking action on pension
issues was a central theme of my campaign and has been major priority of
my administration. Today, I have delivered on that pledge"
The Police Pension Plan will close to new entrants on January 1, 2013,
and new hires will be eligible to participate in the statewide Florida
Retirement System (FRS). In addition to the plan closure, the new
contract includes several key reforms regarding benefits. The employees
remaining in the plan will increase their contributions by 4.7% over
three years, and overtime will no longer factor into pensionable income.
Spousal benefits will be conformed to the more modest benefits offered
by the state retirement system. The contract also alters the Deferred
Retirement Option Plan (DROP), reducing the interest paid on benefits
and eliminating the cost of living adjustment employees receive while in
In exchange for the reforms, Mayor Hayward agreed to make several
concessions, including wage increase spread over the three-year term of
the contract. "As I've said before, when we ask our employees to accept
changes to their benefits, it's only fair that we return some of that
savings to them," said Hayward.
"We've worked very hard to come to a fair agreement with Mayor Hayward
and we are ready to help move the City forward," said Erik Goss,
President of the Fraternal Order of Police Lodge 71. "Protecting the
City's long-term financial stability will help protect the future
benefits our officers were promised."
The new police contract marks the second such agreement Mayor Hayward
has reached during his term of office. An agreement with the general
employees union earlier this year is expected to cut the unfunded
pension liability by more than $5 million.
"This agreement and these reforms are a testament to the value of our
strong mayor form of government, and the change that is possible with
leadership and cooperation," said Hayward. "Together, we can face any
issue, and meet every challenge. I want to thank Erik Goss and the
police union's leadership for negotiating in good faith and continuing
to work toward a solution. I also want to thank my team, including Dave
Penzone and Rob Larkin, for their hard work and trusted counsel.
Finally, I want to thank our City Council for their unwavering support
throughout this process and for their vote today to ratify this
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