Mitch Landrieu | Pension360

New Orleans Creates Pension Reform Task Force

New Orleans Mayor Mitch Landrieu announced Tuesday morning the creation of a “task force” to recommend “fundamental” changes to the city’s Fire Fighters Relief & Pension Fund.

From the Times-Picayune:

The mayor created the “working group” through an executive order that will stay in place for 12 months.

The group will be made up of nine members, including city officials, firefighter representatives and local business leaders, according to the announcement.

– New Orleans Chief Administrative Officer Andy Kopplin

– Councilwoman Stacy Head

– Timothy McConnell, superintendent of the New Orleans Fire Department

– Paul Mitchell, Jr., deputy director of the pension board

– Thomas F. Meager, III, secretary and treasurer of the firefighters’ pension board

– Nick Felton, president of New Orleans Fire Fighters Association, Local 632

– Hardy Fowler, an accountant and the former managing partner of KPMG in New Orleans

– Scott Jacobs, an insurance and risk management professional

– Greg Rattler, Sr., a vice president at JPMorgan Chase & Co.

The New Orleans Business Council will pay for outside consultants and any “technical assistance the group may need, according to the announcement. Its chairman, Paul Flower, will also chair the pension advisory group.

The task force doesn’t have authority over the pension fund’s Board of Directors, so it won’t have any way to enforce the changes it prescribes.

The city and Mayor Landrieu are in the midst of a legal battle over unpaid contributions that were supposed to be made annually to the firefighters’ fund.

U.S. Supreme Court Won’t Hear New Orleans Pension Case

New Orleans has failed to pay $17.5 million in required pension contributions to the city’s firefighters’ pension fund since 2010. A state court last year ruled that the city had to repay the fund in full, and an appeals court affirmed the ruling.

But New Orleans tried to appeal the case to the U.S. Supreme Court – the city argued that it shouldn’t have had to shoulder the cost of the pension fund’s failed investments, which led to a decreased funding ratio and required higher payments from the city.

But today, the U.S. Supreme Court said it wouldn’t hear the case. From NOLA.com:

The U.S. Supreme Court has decided to stay out of the ongoing legal feud between the Mayor Mitch Landrieu and the New Orleans firefighters’ pension board, leaving the city to cover disputed payments to the firefighters’ collective retirement account over the past four years.

The high court refused on Monday to hear an appeal from Landrieu arguing that state Judge Robin Giarrusso overstepped her authority when in March 2013 she ordered City Hall to immediately pay $17.5 million to the firefighters’ pension fund for shortfalls in 2012. Her ruling was upheld by the state’s 4th Circuit Court of Appeal in December.

The Supreme Court’s decision likely will have little bearing on the case, considering that Landrieu and the pension board have begun work on a compromise. On Friday, the two sides agreed to refinance the city’s debts to the fund, a shift that would considerably lower the city’s monthly payments should Giarrusso agree to it. That $17.5 million bill, for instance, would be lowered to $9.2 million under the proposed arrangement.

The two sides go back to District court on October 21.

Photo by Mark Fischer via Flickr CC License

Judge Gives New Orleans Another Month To Cover Pension Debts

New Orleans now has until October 3^rd to come up with a plan to cover the funding shortfalls facing the city’s firefighter pension fund after a judge today extended the city’s deadline.

A judge ruled last year that New Orleans had to pay back the firefighters’ pension fund for the annual payments the city had skipped between 2009 and 2013. That dollar amount could total up to $52 million. From The Times-Picayune:

The standoff between Mayor Mitch Landrieu and New Orleans firefighters showed small signs of a thaw Wednesday (Sept. 3) as Civil Court Judge Robin Giarrusso gave the city another month to produce a plan to cover its massive debts to the firefighters’ pension fund.

Tommy Meagher, secretary and treasurer of the pension fund’s governing board, said the firefighters are willing to refinance the city’s obligations in creative ways to help lower the monthly payments going forward.

“The pension board has gone above and beyond everything we can do,” he said.

Part of New Orleans plan will likely involve several accounting tactics, including pension smoothing. From The Times-Picayune:

He explained that the board had agreed to stretch the city’s future pension obligations over 30 years rather than 14.5 years — a tactic that he compared to refinancing a home mortgage. He also said the board is willing to extend “pension smoothing,” an accounting strategy that lets the fund’s actuary predict higher interest rates when calculating the fund’s future investment returns. Essentially, if the fund can show it will earn more on its investments down the road, the city can pay less to the fund each month.

The board was willing to extend its use of smoothing from three years to seven, Meagher said.

Andy Kopplin, Landrieu’s chief administrative officer, said he had been asking for such breaks since 2011 and expressed appreciation for the board’s willingness to bend.

“We commend the board for doing that,” he said.

When a judge originally ruled in 2013 that New Orleans had to recoup the payments it shorted the pension fund, the city tried to appeal the ruling to the Supreme Court. But the Supreme Court refused to hear the case.