The workshop that convened to tackle the biggest financial issue facing the city — pensions — turned out to be the shortest.
The meeting of the New Haven Board of Aldermen’s Finance Committee on Thursday continued the discussion of pensions — begun on Oct. 18 — with city budget officials’ offering a brief explanation of the efficacy and legality of switching the city’s pension system from municipal to state control. The discussion presented only one side of the consequences of switching, since the union members invited to the workshop chose not to come and testify.
The one local resident who offered an opinion on the possible switch said the city has not been seeking enough analysis of the long-term financial effects of the change.
If adopted, the state-controlled Municipal Employee Retirement Fund would replace the city’s current pension plan.
New Haven’s Labor Relations Director Emmet Hibson said the Board of Aldermen could vote unilaterally to switch over, but most cities tend to change to the state program only for new hires. There would be no immediate effects if New Haven moved to the latter option, he said.
“It would not be an instant savings,” Hibson said. “It would take 10 to 15 years to see a significant change.”
Under MERF, the state would control how much the city would have to pay into the fund. These levels, which are subject to change, are currently 7 percent of salaries for non-sworn employees, plus $95 per member. The city currently contributes 18 percent to its own fund.
Since the city would be giving up control over its own pensions expenditure, some aldermen asked whether the decision was revokable. Ward 13 Alderman Alex Rhodeen said as he understood it, “once you’re in, you’re in.”
But Hibson said the board could choose to withdraw if another pension plan was agreed upon in the future.
Henry David, a New Haven resident who came to offer his testimony, said he did not feel the city was taking a serious enough look at future financial obligations. He said that while he understands the reasons the city might want to switch from a defined benefit to a defined contribution plan — and the reasons that unions and employees might resist that change — he did not understand what the ultimate benefits of simply switching to state control would be.
“I didn’t hear anything [tonight] that gave you any basis for making a decision on the plan on the table,” he said, addressing the committee. “This doesn’t go into who’s paying. I have doubts about whether there is a capacity to produce the analysis you need to come to a conclusion.”
Lawrence Rusconi, the city’s budget director, said after the workshop ended that this was all new territory for the aldermen.
“This is the first time the city has tackled this issue,” he said.
Aldermen said union leaders had told them they were not interested in discussing contracts outside of their collective bargaining units. The aldermen speculated that they may have been worried it would compromise their bargaining positions.
Union leaders could not be reached for comment.