To boost efforts to recruit public safety employees and improve the retention of veteran officers, Memphis Mayor Jim Strickland is proposing restoring pension and other benefits that were reduced eight years ago.
Representatives of the Police and Fire Departments, along with other officials, joined the mayor at City Hall Wednesday (Sept. 28) as he announced his plan.
“Over the last almost seven years, we have continually improved the pay and benefits for firefighters and police officers to better recruit and retain them,” said Strickland. “…Today’s change…will allow us to offer the 1978 pension as an option for all of these essential employees.”
Memphis Police Chief Cerelyn “C.J.” Davis said she expects that the restored pension will be an excellent tool for both recruitment and retention, as Strickland contends.
Strickland explained that the 2019 sales tax referendum on Oct. 3, 2019 has generated millions in funds that will enable the city to pay for the pension plans. In the referendum, voters said “yes” to increasing the sales tax rate to 2.75 percent. The increase became effective on Jan. 1, 2020.
Strickland, as well as other officials who addressed the news conference, said the sales tax rate will perpetually sustain the reinstatement of the pensions.
“Pensions were discontinued … as a response to the financial straits the city was experiencing at the time,” said Davis. “As I understand it, the city was always looking for a way to reinstate the pension benefit for our public safety employees.…I’m no actuary, but the present tax rate will sustain this benefit nicely. We as elated, as you can imagine.”
The background for the pension and other cuts began in 2013 when the then-Tennessee comptroller warned the city that its pension indebtedness was placing the city in serious financial jeopardy.
Then-mayor A C Wharton Jr. proposed cuts in benefits to deal with the problem. That set off weeks of contentious debate between the mayor and council, and representatives of the public service unions over the issue.
The council eventually approved the cuts. Strickland, at the time, was a council member and voted for the cuts.
The controversary resulted in the state legislature passing legislation calling for government pension plans to be fully funded within five years.
Memphis Police Association President Essica Cage-Rosario said officers were happy to see the option to join the 1978 pension plan return.
“Of course, this is wonderful news,” said Cage-Rosario. “This is what we have continually advocated for. The way our pension benefit works is that we contribute to our pension, and the city matches funds. When the employee retires, they receive a monthly benefit from their pension.”
Cage-Rosario said the hybrid plan was not as beneficial because it was “tied to the market.” If the market was doing well, or if it was faring badly, so goes the hybrid pension.
“Now, everyone will have the opportunity and the option of switching over to the 1978 pension plan,” said Cage-Rosario. “Not only is this a great benefit, we expect that it will be a tremendous morale booster.”
Strickland said city government had worked closely with police and fire associations to clearly define the intent of the referendum. Strickland said retention prospects continue to become more promising.
“The health coverage has been restored, and over 80 percent of firefighters and police officers have agreed to stay for 2-5 years in return for a retention bonus of 9 percent of their salary per year.”
Strickland has included the pension funding in his July 1, 2023 city budget. The Memphis City Council must approve the funding when voting on the budget ensues. A counsel voting date is presently unknown.
Because of term limits, Strickland’s 2023 budget will be the last submitted as the mayor of Memphis.
While the exact cost of restoring the pensions has not been determined, the city’s financial analysts say the plan is “affordable under the public safety sales tax referendum.”
Strickland credited public safety employee associations with running a strong campaign in 2019 to increase the sales tax in Memphis to boost benefit packages to help recruit and retain firefighters and police officers.
“But the number one priority was always to restore health insurance for fire and police retirees,” said Strickland. “The voters agreed.”
According to the city’s public information office, there are 1,623 firefighters, and nearly 2,000 police officers. Dispatchers are also considered “public safety” employees.