Because of all the controversy surrounding the current pension and contract negotiations between the City of North Miami Beach and the Police Department’s union, Local 6005 of the International Union of Police Associations, I invited Mayor George Vallejo to submit a guest column to VotersOpinion.com. I offered to publish it unedited, in its entirety, for the purpose of explaining to the residents and employees of North Miami Beach his opinion and reasoning for the proposed pension reforms. If you have any questions or comments for the Mayor, please feel free to post them here or write to him directly at George.Vallejo@citynmb.com.
“Spreading the Wealth”
Last week, the North Miami Beach City Council and I voted unanimously to impose contract and pension reforms for our City’s unionized Police force. These changes will curtail the ever-increasing pension expense that has grown from $500,000 per year a decade ago to $8.3 million per year, on average, every year, for the next 30 years. These unsustainable payouts drain our Police budget and leave insufficient funding to adequately meet the policing needs of our City. Shared sacrifice is necessary not only to ensure the pension systems remain viable, but also so the City has the resources to provide other essential services to its residents. This Pension Reform, long overdue, will save nearly $3 million annually, an amount that can effectively put 30 more Police Officers on our streets— a 35% increase in our force and a top priority among NMB residents.
The Union disagrees with the Pension Reform and has threatened to file a lawsuit to fight these reforms in judicial court, as well as in the court of public opinion, deeming these reforms unfair to its members. Ironically, nothing could be further from the truth. What’s unfair, and irresponsible, is to keep the status quo and continue promising exorbitant pension benefits to these very same and future NMB Officers, knowing that those benefits realistically cannot be paid. Without reform, the numbers clearly show the City would have been forced to continually cut services or eventually go bankrupt like other US cities. This is not about politics, it’s just math.
This Council has the utmost respect for all of the City’s dedicated employees, including our Police Officers. The decision for Pension Reform was well thought out and based on undisputed facts. The fact is our 88 Police Officers earn an average of $102,991 annually, retire relatively young after working just 20 years and collect pensions that start at $61,000, paid for mostly by the taxpayers of NMB. Our Officers are very well-compensated employees with exceptional benefits (click here for salaries) who work in a City where the average combined household income is $41,489. After two years of negotiations and mandatory arbitration, the impartial Special Magistrate assigned to listen to both sides agreed with the City’s position, calling it “reasonable and necessary…a more sustainable yet still generous retirement.”
Below is a FACT CHART outlining NMB Police Officers’ Pension benefits, Base salary, and Health Insurance Prior to Pension Reform and After Pension Reform. This will illustrate that the changes are reasonable and continue to be generous for our Officers.
NMB Police Officer PENSION Benefits, Salary, Health Insurance
Prior to Pension Reform and After Pension Reform:
It is important to remember that the original purpose of the Police Pension was to provide a secure retirement for our Officers after they had given the City a career of service, which is noble and justified. However, over the years the pension system has been exploited to the point where we now have retirees in their 40s collecting million dollar-value pensions at taxpayer expense. This outcome was never the intent and works much to the City’s detriment.
The numbers involved are staggering and clearly show why reform was necessary: Combined, the pension tab for all of the city’s employees added up to $11 million for 2013, which is more than ALL of the property taxes collected citywide. By implementing reform now, the average yearly taxpayer contribution for the Police Pension alone will decrease from $8.3 million to $5.4 million—a projected savings of nearly $3 million per year, each year, for the next 30 years. When you add the savings from the other two City pension plans, the combined savings is well over $4 million per year, each and every year, for the next 30 years.
From the outset, the City sought to achieve three major goals with Pension Reform:
- Create a sustainable plan that would end the financial hemorrhaging and secure the pension into the future. Savings had to be immediate, ongoing and verifiable.
- Create a reasonable plan that would enable us to recruit, develop and retain talented Officers by providing them a secure retirement after they had given us a career of service.
- Make the reforms as fair as possible by implementing the formula changes going forward, thus preserving benefits already earned for Officers closer to retirement versus those just starting their careers.
We believe, and as the attached Report & Recommendations from the impartial Special Magistrate shows, these new contract and pension reforms achieve all three goals and are the best solutions available today.
Regarding the “Vote provision” and potential lawsuits:
Now that City Council has voted to impose these reforms, it is expected that either the Police Union or the Police Pension Board will attempt to block the reforms by filing a lawsuit, possibly claiming that it is illegal for the City Council to change the Police pension plan without first obtaining approval from 60% of the participants in the plan, as stated in the current pension ordinance. Previously they have taken the position that eliminating this vote amounts to a violation of the participating Officer’s “vested rights”. They are wrong.
The City’s legal position is supported by a recent Florida Supreme Court ruling that dealt precisely with whether changes and reforms made to pensions going forward affect “vested rights.” They, in fact, do not, and the City is well within its rights to eliminate this vote provision.
Public sector pensions have been a topic of controversy and debate for several years now. The City of North Miami Beach faces the same challenges as many other cities and counties nationwide: An ever-growing pension burden that threatened to consume the budget and leave nothing to show for its tax dollars but overly-compensated retirees. The voters and taxpayers deemed this situation unjustifiable and sent a clear mandate to the City Council to fix the problem by passing fair, reasonable and sustainable pension reform.
The reforms we have enacted strike a fair balance between providing a secure retirement for our current and future Officers while ensuring funds remain available to provide the necessary and essential services our City needs to grow and prosper. We are on our way. The City of North Miami Beach, its residents and its future generations deserve as much.
Mayor George Vallejo