As part of Mayor John DeStefano Jr.’s effort to cure the city’s fiscal woes, New Haven is taking concrete steps to end perks for its top officials.
Next Tuesday, the Board of Aldermen will vote on whether to eliminate the pension formula that gave former assistant police chiefs Ariel Melendez and Stephanie Redding yearly pensions higher than their salary when they retired this year. The formula, known as “rank-plus-one,” calculates pensions for officials meeting certain conditions based on the salary of the next rank up from their latest position. Amid Mayor John DeStefano Jr.’s calls for cost-saving reforms to the city’s pension plans, the rank-plus-one provision and so-called “longevity” bonuses for long-serving executive management staff appear headed for elimination.
The Finance Committee voted unanimously last month to recommend a proposal eliminating the rank-plus-one provision, which the full Board of Aldermen must now approve. The Board will act on longevity bonuses at a later date.
Chief Administrative Officer Robert Smuts ’01 said the city hopes to make sure the two assistant chiefs’ “outrageous” pensions are not repeated.
“We’re closing the barn doors now after two very expensive pensions escaped,” Smuts said.
Smuts said that Melendez’s and Redding’s pensions were an anomaly due to a “perfect storm” of three factors.
First, Smuts said, the rank-plus-one provision in the police union contract allows officers to retire at the next rank up if their current salary exceeds the average of their four highest-earning years.
Second, Melendez’s and Redding’s contracts mandated that since they were promoted from within the department, their pensions would be governed by the same provisions as in the union contract. The final step in creating what Smuts called the was the Board of Aldermen’s drastic increase in the police chief’s salary in 2008, which was intended to lure candidates from across the country.
The city’s actuary predicted that the rank-plus-one formula would have negligible costs, but Smuts said Melendez, for example, spent time that other officers were earning overtime pay in the military as a reservist. That meant his total non-salary earnings over his three decades at the police department were lower than average. Because his four highest-earning years averaged to $94,000, lower than his assistant chief salary of $105,000, he qualified for the rank-plus-one pension formula.
As a result, Melendez is receiving 83 percent of the $150,000 that Police Chief Frank Limon makes a year. Without the rank-plus-one provision, he would be receiving 83 percent of $105,000, the assistant chief salary. Redding, who retired in June, got a generous pension package in a similar way.
The city will not fill the police department’s two assistant police chief vacancies until the formula is eliminated, Smuts said.
Ward 29 Alderman and President of the Board of Aldermen Carl Goldfield said he expects the proposal to eliminate the rank-plus-one formula will easily pass the Board of Aldermen next Tuesday.
“It’s just common sense,” Goldfield said. “[These two pensions] were a totally unintended result—they just fell through the cracks.”
While the rank-plus-one provision has proved costly to the city this year, it is only a small of the broader fiscal problem the city must address, DeStefano said. To his knowledge, DeStefano said the rank-plus-one provision has affected only two officials in the past year: Melendez, who received a $37,350 boost to his annual pension from the formula, and Redding, who received a $35,000 boost when she retired last June.
DeStefano said these pension changes must complement an overhaul of the city’s pension packages for unionized employees, which are expected to run out of money by 2030 under current funding levels. In his 18th State of the City address last Tuesday, DeStefano said the main drivers of the city’s budget gap, which is expected to exceed $200 million in the next four years, are city employee healthcare and pension benefits.
“The city’s pension provisions need to be reset for both unionized and non-unionized workers—they’ve become unsustainable,” DeStefano said.
Despite DeStefano’s public vow to the contrary, the city’s executive management employees, which include 39 non-unionized upper-level workers in City Hall, received longevity bonuses in late January. DeStefano said the payments were the result of an oversight: he initially thought he could simply suspend the bonuses unilaterally, only to find out that he needed the Board of Aldermen’s approval to do so. He found out too late, and was not able to get their approval before the checks went out, he said.
The highest longevity bonuses were $4,469 each to Budget Director Lawrence Rusconi, Controller Mark Pietrosimone, and Fire Chief Michael Grant. In total, the city paid out just over $90,000 to the 39 executive management employees.
Ward 7 Alderwoman Frances “Bitsie” Clark, the vice-chair of the Finance Committee, said she hopes those 39 employees give back at least some of what they were given.
“Maybe individual people deserve what they’ve been given, but it’s not about that,” Clark said. “It’s about what you’re willing to share, what you’re willing to step up and do.”
Clark added that she believes many of the city employees who have been most vocally opposed to changes to their pension plans also do not live in the city and thus do not need to worry that their taxes will increase to sustain those plans.
For his part, Pietrosimone, who lives in New Haven, said he gives back $2600 to the city every year to compensate for his lunch expenses. Rusconi and Grant could not be reached for comment.
The next meeting of the full Board of Aldermen is Feb. 22.