Pension Bills for New Orleans' Firefighters Await Governor's Signature

In a matter of minutes Thursday, the state Senate overwhelmingly approved three bills in a four-bill package that would change pensions for newly hired New Orleans firefighters and end a decades-old feud with city government.

Those three bills head to Gov. John Bel Edwards for his signature.

An agreement on the fourth measure was reached late Wednesday night, said Sen. JP Morrell, the New Orleans Democrat handling the House-passed bills in the upper chamber. The amendments weren’t ready by the time the Senate met Wednesday, so the final bill in package will be debated Friday, he said Thursday after the first three bills were approved.

The legislation represents the settlement of a dispute between successive mayors and city firefighters over back pay and pension support that has been going on for nearly 40 years. The battle most recently included dueling accusations about who was most at fault, two lawsuits, tens of millions of dollars in damages, and the threat of a contempt of court finding that nearly ended up with New Orleans Mayor Mitch Landrieu being placed under house arrest.

Generally under the pact, newly hired firefighters will have to work longer before retiring and receive less in benefits.

House Bill 56, would raise the retirement age from 52 to 57 and lower the rate by which retirement benefits are calculated. The accrual rate is now 2.75 percent; under the legislation, that multiplier becomes 2.5 percent. That means the benefit would be the product of years of service times final compensation times 2.5 percent.

House Bill 57 would base the contributions to the retirement system on compensation instead of salary. Compensation includes factors such as overtime and lump-sum pay.

House Bill 59 codifies the way sick and annual leave are treated in calculating benefits.

It’s the dispute on House Bill 58 that has held up passage of the four-bill package until the waning days of this legislative session. It involves about 60 people who had the option before the settlement was reached of participating in both DROP and PLOP.

The Landrieu administration said its interpretation of the agreement is that the roughly 60 firefighters were not allowed access to both extra retirement programs after a certain date. Union leaders counter that refusing access to both programs now amounts to breaking the contracts with those 60 firefighters.

Generally, the Deferred Retirement Option Plan is used by employees who have reached the top of their grade and don’t think they’ll see any more significant promotions. Choosing DROP locks in the calculation for monthly payments the retirees will receive for the rest of lives.

But it allows them to start receiving monthly pension checks while they continue to work and collect a pay check for five years.

The Partial Lump-Sum Option Payment Account allows a firefighter on his last day of work to choose a lump-sum payment taken from his retirement account. Doing so would decrease the monthly benefit, but some retirees want to pay off their remaining bills, like a home mortgage, and are willing to live more modestly.

Follow Mark Ballard on Twitter, @MarkBallardCNB.

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