City of Memphis Dump Retirees, Police and Fireman. (2015, health insurance)

[MrOtiose]

Memphis City Council approved the 2015 budget with massive cuts to employee and retiree health insurance.
Employees say they can't survive day-to-day with a 24 percent hike in health insurance premiums. Retirees say they can't live paying 100 percent of their premiums.

On the other hand, the city administration says the city's bank account will go bust, taxes will go up and city services will be cut, if they don't make adjustments to pay off pension debt and close the budget gap.

Union leaders say the city puts projects like the bike lanes before employees.

"We've got to have a bike ride across the bridge for $2 million? When we're treating our employees like this? Who in the hell is going across the bridge on a bike? Some idiot! I know somebody's going to get mad about that, but I'm sorry," said Memphis Fire Association President Thomas Malone.

The city administration says citizens benefit most in the long run.

"We can start thinking about things we can do to really make our city great from the neighborhood level up, so we won't be going from fiscal crisis to fiscal crisis," said Memphis City CAO George Little.

Residents get no tax hike. Active employees: no pay raise. The cuts save taxpayers $26 million a year. Employee health care premiums increase 24 percent. Overall savings pay down pension debt and lower the budget gap, while some retirees will now pay 100 percent of their premiums.

The cuts offer a sustainable budget curbing growing liabilities. Employed spouses are cut from the city's health plan. Money saved will restore fire and police academy classes, but the union says it'll be harder to recruit/retain employees.

Money saved will be used on blight and street repair. The smoker surcharge nearly triples.

"We do value our employees. We do want to attract and retain employees, but we've got to do it in a way we can afford it and sustain it," said Little.

The city says they'll work with people to minimize the impact of the cuts; that starts in January.

Both the fire and police unions say their members have been calling all Wednesday to get assistance for their exit strategy.

"The phone has been off the hook today," said Memphis Police Association President Mike Williams. "We don't get paid commensurate with the civilian sector for the job we do. So if you don't have the pension, if you don't have health care, why are you here putting your life on the line?"

Williams says officers stand at death's door every day and some feel that threat is not worth the return.

"This is a combat zone out here. It's a war zone," he said.

Little says the city will have to deal with collateral damage from the cuts to avert a tax hike or cuts to city services.

"There may be a transitional period. We'll just have to see how that goes," he said. "A lot of other cities are going through real changes in terms of being able to attract and retain particularly in public safety, so we are not alone and I think we'll be competitive."

The savings are supposed to help make the pension fund whole, pay down debt and allow for more neighborhood investment. Pension reform is the next big battle in the coming weeks.

Meanwhile, union and retiree leaders are considering a lawsuit

[BirdieBelle]

My biggest problem is that the city apparently was not even putting all the funds into the pension account.

The fact is that benefits are a HUGE expense for cities, but you don't cut them off entirely. Because of the nature of the job, first responders don't typically work as long as other employees, and the pensions and benefits are very important. There are ways to reduce the costs that the city council should have looked into.

[MrOtiose]

Did the city make their cuts in the areas where they would hurt the least amount of people and get the most savings? Nope. They started with a group of people who don't vote in city elections because they live in the country now. They picked on a group of people who couldn't defend themselves. And because they didn't just cut them loose' they are allowing them to keep their insurance at an astronomical amount, they don't qualify for any help through the ACA. They also don't qualify for Medicare supplements.

See..the city is double screwing these people. Instead of just not offering these people insurance. So they could then go to the ACA and get some help. The city doesn't want to pay the fine to the Feds. So the city continues to offer the insurance at a rate so astronomical no retired person LIVING OFF A COPS PENSION could possibly afford it.

This is wrong. And justifying it because others suffered something like it? Just plain wrong.

[Longtimelistener]

Reduce the number of firemen. We have way too many in comparison to cities of similar size.

[85rx-7gsl-se]

My understanding was the original proposal would only cut subsidies for retirees over 65 who are eligible for Medicare? Did that change before the final vote?

Proposed health insurance changes would increase costs for city retirees and employees - Top News - InsuranceNewsNet.com

[Geneyus]

The part that I find most disturbing is that millions of dollars are still being spent on other projects like the Raleigh Springs Mall (who goes there anymore?) and Sears Crosstown revitalization projects, but they don't have enough money to support our public servants. It's a slap in the face to the men and women out there working hard in the heat every day. Imagine interacting with the worst people in Memphis every day and then having your employer turn its back on you.

[85rx-7gsl-se]

The problem is that these problems have been a long time coming and now those currently in office are stuck coming up with a solution that will not satisfy everyone. Running departments fat, especially when you have generous pension and retiree insurance plans to pay for, is a recipe for disaster in the long run.

[tigerphan]

Originally Posted by 85rx-7gsl-se

The problem is that these problems have been a long time coming and now those currently in office are stuck coming up with a solution that will not satisfy everyone. Running departments fat, especially when you have generous pension and retiree insurance plans to pay for, is a recipe for disaster in the long run.

I'm impressed with their rare display of leadership. It was not an easy decision to make.

I share the opinion that many posters have that Memphis does not spend wisely.....but their benefits packages were unsustainable and unaffordable. I wish that we could have accomlished the same thing without impacting retired people, but no one stopped them from setting up their own investment plan as an emergency fund or supplemental retirement package to cover some of these expenses.

I think that moving younger employees to a defined contribution plan, which will be the next big step, is going to be leap in the right direction for Memphis. A lot of cities are going to struggle with these decisions on retiree benefits and pensions in the future. Memphis will hopefully be ahead of the curve here.

[MrOtiose]

Leadership is very rare...

The City of Memphis has turned its back on the Loyal Service of These Retirees.

A lawsuit will be forthcoming.

#1 - Who in their right mind would want to work as a police officer in Memphis for a 401a (which is worse than a 401k because your employer can change their contribution whenever they want), no SS, and no retiree healthcare? With these changes, those officers caught in limbo with 11 to 25 years on the job have no reason to retire (especially since the DROP is being cut down to just one year). These officers will remain in their jobs until they reach Medicare age. Thus already stagnant promotions will become non-existent! There will be a logjam of Majors and Lieutenants who won't retire. Currently it is the norm for an officer to ride in a squad car for 10 to 15 years before they have a chance to get promoted to Sergeant. These changes will push that timeline further because there just won't be any openings.

#2 - With no retiree healthcare, no one will stay 25 years except those that are vested in the pension now. This department will have trouble even finding qualified applicants willing to apply! Dallas PD offers better pay, benefits, and pension, and they still have to travel across the entire country to find qualified applicants.

#3 - Here's another scenario under no retiree healthcare. Any officer injured on duty who is not able to work anymore would receive no medical pension, just whatever money they had in their 401a, AND they would have to pay their own health insurance. I could easily see an officer getting shot and paralyzed, confined to a wheelchair, and having nothing to show for it but a minuscule 401a, no SS, and No health insurance. It's not worth the risk to your wife and children. Every single officer I know with less than 10 years on the job is already applying for jobs elsewhere. I foresee several precincts being closed next year due to manpower shortages and a huge problem finding qualified applicants to apply. Waivers will need to be issued to people with questionable criminal histories just to fill up a training class (if we ever have another one!)

[85rx-7gsl-se]

Can you cite some sources showing the city's intention to do away with medical pensions entirely?