Toledo liable for pension costs in collective bargaining agreement

9/26/2007

An appeals court has ruled that the city of Toledo's collective bargaining agreement with its largest union requires it to shoulder the cost of the increase in the employees' share of state-mandated pension contributions.

The ruling by the Ohio 6th District Court of Appeals in favor of American Federation of State, County, and Municipal Employees Local 7 could cost the city about $384,000 this year and $593,000 in 2008.

Local 7 represents about 900 city employees.

Under collective bargaining agreements with Local 7, the city began picking up a portion of the employees' share of the pension contribution in 1994, culminating in a pickup of the full 8.5 percent in effect in 1999.

The city also pays for the employers' share at the same level.

Since then, the Ohio Public Employees Retirement System has raised the employee contribution to 9.5 percent this year and 10 percent next year, and the city has been deducting the additional percentages from employee paychecks.

In a ruling Friday, the three-member court upheld the decision of an arbitrator who found that, even though the contract specified a pickup of 8.5 percent, the intent was that 100 percent of the employees' pension contribution would be picked up.

The arbitrator's ruling also was upheld by a Lucas County Common Pleas Court judge.

City Law Director John Madigan said he did not know if the city would appeal the appellate court's decision to the Ohio Supreme Court.

"It'd be tough. It's hard to beat arbitrators' decisions," he said.

The total cost to city taxpayers of picking up Local 7 employees' pension contribution is projected at $3.26 million this year, and $3.36 million next year.

Employee pension pickups have become controversial as the city faces a potential deficit of $10 million in 2008.

Last year, despite looming deficits, the Finkbeiner administration negotiated and city council approved new collective bargaining agreements with the police and fire unions to increase the taxpayers' share of police and firefighters' pension contributions by 3.75 percent, to a total of 10 percent.

Toledo is one of the few cities to offer such a benefit to its employees.

The city government also pays a 19.5 percent employer share for police pensions and a 24 percent employer share for firefighter pensions.

The city's cost for paying the employee share of police and fire pensions was estimated at $12.7 million this year and $14.3 million next year, according to city Finance Director John Sherburne.

Contact Tom Troy at: tomtroy@theblade.com or 419-724-6058.