Phila. unions question plan to defer pension payments

Union appointees to the Board of Pensions and Retirement yesterday questioned the city's plan to balance its budget over the next two years by putting off $235 million in payments to the already troubled pension fund.

During its regular meeting yesterday, the unions asked for a special session to determine the impact of the delayed payments and the legal liability of board members if such a plan goes wrong.

City Finance Director Rob Dubow, who chairs the board, could not attend the meeting because he was in Harrisburg to argue the merits of the city's recently passed $3.8 billion budget. That budget won't work without state legislation authorizing its deferment of pension contributions, its other adjustments to the fund, and its penny-per-dollar increase in the sales tax.

After returning to Philadelphia last night, Dubow said he would set up a special meeting to address the union's concerns.

Specifically, the city would defer $235 million in pension obligations in the first two years, paying 8.25 percent interest, making those payments over the final two years using the extra sales-tax revenue. Yesterday's action signals a concern from the unions about the that proposal.

The pension board has nine members, including one for each of the four municipal unions: police, fire, and blue- and white-collar workers. The Nutter administration has four appointees, including Dubow. The city Controller's Office has the ninth seat and is often the deciding vote.

The same board stood by Nutter this year when, as part of his first budget proposal, he recommended accounting changes to the pension fund that would spread payments over 40 years, instead of 20 years under current law, and several other adjustments requiring state approval.

Yesterday, members said Nutter should have consulted the board, or its staff, before cementing the latest proposals.

John "Moon" Reilly, representing Local 22 of the International Association of Fire Fighters, noted that the 2014 pension contribution by the city would balloon to $840 million under the plan.

Carol Stukes, a board member representing District Council 47, the white-collar union, asked: "Is the mayor fully aware of the full repercussions he's putting all city employees under?"

Ronald Stagliano, the Fraternal Order of Police representative on the board, said members wanted to fully understand their personal responsibility for such a decision in a pension system that is currently funded about 50 percent - even if they were not making that decision.

"Obviously, when you're underfunded the way we are, it's never a good idea to defer payments," Stagliano said. "We don't want to overlook that responsibility, and we need to find out what legal obligation we have to members of the fund to weigh in on these things."

City Controller Alan Butkovitz called the board's concerns "due diligence."

"Everybody on the pension board is very cognizant of their responsibility as fiduciaries," he said.

"I don't think it can be downplayed," said Bill Rubin, the board's vice chairman, representing District Council 33, the blue-collar union. "It was a very spirited discussion that is going to have to resolved."