Special Board of Aldermen Public Hearing Page 17
CFO Griffin
For the purposes of the calculation, the base can increase or decrease each year based on the
approval of the Board of Aldermen’s deliberations and then final budget passage.
Joe Pacello
Two other questions just on the expense side and benefit side. | understand the difficulties in the
benefits. I’ve worked in the private sector for many years. I’m retired now. What is the contributions
the employees are making toward the health benefits and is that comparable to the private sector?
CFO Griffin
The employee’s contribution is 20 percent for an HMO and 30 percent for a PPO.
Joe Pacello
So that’s probably in line with the private sector.
As far as the pension goes and health insurance for that matter. | know we’re upon the year now so
it's hard to make these kind of decisions but going forward for the next 2, 3, 4, 5 years, what’s the
plan to work at getting those numbers down? In the private sector, pensions are by the way the dodo
bird. There are no more pensions per say. They’re more 401Ks or 403Bs. Are there plans in the
works for the future to get that more in line with the private sector?
Mayor Donchess
You may have heard before that we’re in a State pension system. At this point it is a State mandated,
a State run State system. We do not negotiate pensions with any of the unions. That’s a common
misperception that somehow we have negotiated or that these are in the union contracts. They’re
not. As Mr. Teeboom mentioned at some point but it was numerous decades ago, the municipalities
were induced to enter the State pension system through the promise that the State would contribute
35 percent of all municipal pension costs which they did for a whole number of decades until about
2008. Then over a period of several years, they reduced their promised contribution to 30 to 25 and
then to zero percent. That’s one of the largest causes of the increase in the city’s pension budget.
Even though as you’ve already heard, the State is recapitalizing the system and most of the money is
going to try to build up the reserves which now stand at $7.5 million. Even though that’s going on if
the State were still paying their 35 percent, it would reduce our budget by about $8 million. The city
through its legislative delegation, Alderman LeBrun, Alderman O’Brien, and others in the legislative
delegation sought to change the way the State approaches the pensions in various respects. One of
which was to begin to not get up to 35 but to at least begin to restore some of the contribution they
used to make. None of those bills passed. The way to change the pension system or to get the
State to again participate is through the State legislature.
Joe Pacello
Right so if the State does not acquiesce is that upon to decide if we want to participate in that model
into the future or are there ways to get out of that?
Mayor Donchess
Well right now State law says we have to remain in unless we do a few things. One would be to pay
them so that the system is also undercapitalized at this point. We'd have to pay hundreds of millions
