January 19, 2009

Pa. city wants to retain veteran LEOs

By Jarrett Renshaw
The Morning Call

ALLENTOWN, Pa. — Allentown’s plan to retain veteran police officers by allowing them to collect retirement benefits while remaining on the force will cost the city $73,673 annually in increased pension payments for two decades, according to a study released Jan. 5.

The anticipated increase in the city’s contribution to its police pension fund was in line with the administration’s expectations, paving the way for City Council approval of the program during tonight’s meeting.

“It’s a very small price to pay, and well worth it, to retain these veteran officers,” said Mayor Ed Pawlowski.

An actuarial study of the program was required prior to a council vote, which is expected Jan. 21. The study must prove that the program is “actuarially sound” — a term that is open to interpretation, but that in general means contributions to a fund are enough to cover its expected payouts.

The study’s author, Randee W. Sekol, an independent actuary, concluded that the program, “will not effect the actuarial soundness of the pension plan.”

The study took a limited look at the deferred retirement option program and its financial impacts and did not include any discussion about the overall value of the city pension funds, which have been pummeled by the slumping national economy.

City spokesman Mike Moore said 22 officers, including nonunion department brass, have enrolled in the program. City records show that roughly 30 officers in the department are eligible for retirement.

The preliminary numbers show the city’s plan to hang on to officers and avert an exodus is working as planned. More than 80 officers have left the force since 2005, reducing the department’s overall experience and cutting staffing in its most important investigative units.

The program, which would only apply to police officers, was created to stem the flow of retirements.

The mass exodus was prompted by a much-maligned contract that included lucrative retirement provisions, which led to more than half of the retirees leaving the force with pensions higher than their base salaries.

The retirements left the department younger and understaffed in its investigative units, and city officials feared that a last wave of departures would further exacerbate the problem.

The deferred retirement plan was created through an arbitrator’s ruling in November that settled contract negotiations between the city and the police union.

The arbitrator’s ruling did not explicitly apply to ranking police officers such as Chief Roger MacLean, who are not in the union, but the city has decided to include them in the deferred retirement program.

Among other things, the program allows eligible officers to bank pensions while remaining on the force and collecting their base salary. The pension payments are placed in 401(k)-style accounts and are made available to the officers in a lump sum after they officially leave the force.

Pawlowski said the cost of retaining veteran officers outweighs the cost of the program.

“We stopped the hemorrhaging and now we can rebuild the department,” he said.

Pawlowski also argued that many of the officers would have retired without the program and the city would have had to pay their pensions, as well as hire new officers, albeit at a lower salary.

The study does not include the underlying numbers used to calculate the financial impact to the city, such as the specific number of officers eligible and how may are expected to enroll.