Friday, August 28, 2009

City Balancing Budget On Backs Of Pensioners

We're starting this game of short-changing contributions to our public safety pension funds all over again. The City of Indianapolis was dealt a big break a year ago when the State of Indiana agreed to pick up more than $400 million in unfunded pension liability the City had incurred years earlier for its public safety officers. The removal of that debt saved the City at least $30 million a year in debt service to repay that obligation. Now we learn that a pension that benefits hundreds of retired Marion County deputy sheriffs has been placed in jeopardy because the City decided to withhold $3 million in contributions to the fund to help balance the budget. WRTV's Jack Rinehart has the details:

Indianapolis budget shortfalls have put the pensions of hundreds of former Marion County Sheriff's Department deputies in jeopardy.

For the first time since the fund was set up in 1963 that the city failed to make its full contribution, 6News' Jack Rinehart reported.

Former sheriff's deputies said they are concerned because the law states that if the government fails to make a minimum contribution for three years in a row, the pension plan is automatically terminated.

You can't make calculated risks on the backs of people who you've already made a commitment to, people who are risking their lives every day, so that your government can run," said Sgt. Rick Snyder, a former sheriff's deputy.

The pension discrepancy began when the Marion County Sheriff's Department and the Indianapolis Police Department merged in 2007, while more than 350 former sheriff's deputies remained under their original pension plans.

That fund lost 26 percent of its value when the economy slowed last year. The city then withheld a $3 million contribution in an effort to balance the budget.

The administration further angered former sheriff's deputies by fully funding pension plans for Indianapolis fire fighters and former IPD officers.

"I would like the opportunity to come to work every single day knowing that I'm going to be treated just like the guy next to me that was a former IPD officer who's now secure in his pension. I'd like to be secure in my pension as well," said Lt. Mike Perkins.

City Controller David Reynolds told Rinehart that the city fully intends to continue funding the pension plan, but that officials want to wait until the economy stabilizes. He said the city will not miss the three-year mark.

"Pension liability is a core service. We have every intention of funding pension liabilities," Reynolds said.
This development provides further evidence as I've discussed before that the City's budget is not truly balanced. We also learned at the Sheriff's Department's budget hearing this past week that it is behind by at least three months, or $4.5 million, in payments to the private operator of Marion County Jail II, Corrections Corporation of America. At the same time, the Sheriff's department went out and made unnecessary purchases of motorcycles and new cars for its deputies.

I've been a long-time critic of the over-generosity of these public-funded pensions for public safety officers. I think it is critical, however, that we always stay current in funding our obligations to these systems so people can fully appreciate just how much they are costing us. Long-term pension reform is critical, but good luck with that effort. The FOP and firefighters' union exert almost complete control over our City-County Council. A number of the council members are public safety officers or are married to a public safety officer and have a vested interest in keeping those plans as generous as possible.


Unknown said...

Actually they claim to be behind 3 months (I thought the figure was $4.8 million) to CCA which runs private Jail #2. I find it highly suspicious that they claim this deficit has existed since 2004 but never bothered to mention it. I'd like to see concrete financial documentation verifying this deficit. They said the deficit accured because of a persistent undercount of the inmates at Jail #2. According to the contract though, CCA every month provides the Sheriff's office with a count and a bill. Their explanation for the deficit doesn't make much sense.

Gary R. Welsh said...

This is a common ploy used by government leaders to make budgets appear balanced, Amanda. I suppose at a certain point in time there was an understanding that the county would delay payments to CCA to shore up the budget. The problem with doing that it requires a hit on the budget at some point in the future when the payment is made current, if it is ever made current. The contractor would acquiesce in this arrangement of the delayed payment as long as it believes its contract is in no danger of being axed.

jabberdoodle said...

My notes from the hearing say they are behind 3 months for a total of $4.5 million and there is an annual adjustment of $400,000 on top of that.

I do seem to recall this CCA debt was mentioned last year or the year before - this wasn't news to me this year and I don't otherwise follow the Sheriff's budget. So, I'm not sure they have been hiding it.

I am surprised about the pension issue arising. The City shows a $16M surplus going into the rainy day fund (if it doesn't get picked off for the CIB before the budget is finalized) so they could pay the $3M to the pension.

Indy4U2C said...

Frank Anderson should have put some money in the pension fund instead of buying motorcycles for his cronys to style.

The sheriff has no need/use for motorcycles! Just what will he do with them, serve civil process on sunny days? -I think not!

Paul K. Ogden said...


Actually the Sheriff's Department claimed last year that they owed CCA money due to CCA deciding to take an inflation adjustment and they owed CCA for inmate meals. The inflation adjustment is automatic on 1/1 of every year and inmat meals are part of the per diem. The council let them move money from one account to another to pay CCA $225,000. They never mentioned at that time that they owe CCA $4.5 million dollars.

Downtown Indy said...

As I just noted on Paul Odgen's blog, I witnessed the driver of Sheriff's paddy wagon lic. #2965 taking in a movie at Southern Plaza this evening. Dressed in civies and with a passenger and with taxpayer's providing limo service!

I find that an appalling waste of taxpayer dollars. Take-home police cars make sense to me, but not a 'wagon.' It seems no more sensible than would be a take-home firetruck or ambulance.

swan said...

I think the vast majority of the voters in Marion County agree with this report, Advance. Thank you!!