Adrean Sees Pension Reform Vote This Week

The Atlanta City Council appears ready to approve pension reform legislation this week, with Buckhead Councilwoman Yolanda Adrean’s hybrid plan headed toward majority support.

Adrean, who represents Buckhead’s 8th District, said that the issue is on the council’s agenda Monday, but she expects the vote to come in a special called meeting at 10 a.m. Thursday. She said the council has scheduled a work session with actuaries at 1:30 p.m. Tuesday.

 Council members Keisha Lance Bottoms, Howard Shook, Alex Wan, Aaron Watson, H. Lamar Willis and Ivory Young have also signed on as sponsors, according to The Atlanta Journal-Constitution. Shook represents Buckhead's District 7.

Adrean's hybrid proposal, offering current employees the choice of a defined benefit or 401(k) type plan, was approved last week by the Finance Committee, which she chairs, in a contentious meeting.

The committee’s vote essentially rejected a union-supported plan by council member Felicia Moore, who represents part of Buckhead, that would retain the present defined-benefit pension plan but increase employee contributions. 

Adrean, a CPA,  said Friday that council conflict over the issue  has been resolved. “I believe council is real motivated to do something,” she said. “We can take the savings and invest them in services to the citizens. We’ve all made peace and hit the reset button and we’re working together as a team.”

After eight work sessions and a day of a city council retreat devoted to the issue and meetings with experts, she thinks the council is prepared to make a decision. “We’re devoted a lot of time to understanding this issue, and I think council does understand it,” she said. “One hundred percent of council does agree we do need to make a change.”

Adrean says one key stakeholder segment she hasn’t heard enough from is her constituents, asking them to give their views by e-mail or phone, or to attend the meetings this week. “We’ve heard a lot from the unions, but we have not heard from the citizens. I’d love to hear their point of view.” Here is a link to her website.

While her plan at first received qualified support from firefighters union representative Jim Daws, the union later threw its support to Moore’s proposal. Adrean said her plan offers significant benefits compared with Moore’s.

“We need tor really change the dynamic of how our employees save for their retirement,” she said. “Right now, we have a one-size fits all defined benefit plan, and the Moore plan would continue that. I don’t think that’s right.”

Pointing out that city employees have not received pay raises for years, Adrean said, “it’s real important to change the dynamic of of paying people low wages and promising them a future benefit that the city cannot afford.” She said that under her plan, city workers would receive regular salary increases and have flexible retirement options. Under her plan, the city contribution would be “a generous 8 percent.”

The city now has a $1.5 billion pension liability that could grow to $4.5 billion in 10 years if no action is taken, according to The Atlanta Journal-Constitution.

Adrean said that last year, the city contribution to the pension plan was $120 million and the employee share $20 million. Her plan would save the city $20 million a year over the next 10 years, dropping to $15 million a year “Once Social Security kicks in.”

Her plan, she says, “ reduces the city's market risk, and it allows the employees to start saving for the future with two vehicles instead of one.” Her plan would also allow new city workers to enter the Social Security system, which is unavailable to current workers. Unlike the plan first proposed by Mayor Kasim Reed, her proposal doesn’t freeze current employees’ benefits. New employees would also join the 401(k0 type plan. 

Under the 401(k) type plan , employees would contribute 8 percent of their pay, to be matched by the city. She called this the “defined contribution” plan. The “defined benefit” plan for current workers would change the system to a 1 percent multiplier, a “cut” from the 3 percent multiplier for police and firefighters and 2.5 percent for city workers. The city would make an 8 percent contribution.

She said she understands union opposition to her plan, but “we are in an acute position because property taxes continue to go down and our unfunded liability is over a billion dollars and there’s no flexibility on how to amoritize that debt. We don’t have as many options as other municipalities.“It’s not a decision that I take lightly, but it’s a very difficult economy we’re in. “ 

She said city tax digests are not expected to recover for another three to six years. “There’s no pleasure in doing this. It’s a necessity.”