The city of Grand Rapids took another small step last week in its march to transform the way it does business. City commissioners approved the pension options that judges and non-unionized employees in the city’s 61st District Court agreed to make.
“I’m really pleased that the court has stepped up to do that. I’m hoping we get the same result from our bargaining units,” said Mayor George Heartwell.
City Manager Greg Sundstrom said these changes to the general pension plan, which doesn’t include police and fire personnel, could reduce the city’s cost for the retirement program by up to 20 percent.
City Director of Human Resources Mary Beth Jelks told commissioners the modifications the court’s six judges and employees consented to are the identical options that the city’s non-represented managers, directors and administrative staff accepted in August.
These employees will choose from three options: They can hang on to their current 2.7-percent pension multiplier if they increase their contribution rate to 10.2 percent. They can select a smaller contribution rate of 8.95 percent, but their multiplier will drop to 2.5 percent. Or they can choose an even smaller rate of 7.28 percent for their contribution, but their multiplier will fall to 2.2 percent.
“The implementation date of this new pension change for this employee group is scheduled to be effective after the Dec. 31, 2010, deadline, on or after Jan. 9, 2011,” said Jelks.
The city’s current contribution rate to the general pension is 13.6 percent. But without any changes to the plan’s funding provision, that rate has been projected to rise to 27.5 percent in 2015. Non-union employees make up about 5 percent of the city’s total work force.
Sundstrom and his staff have until the end of this year to get the city’s dozen labor unions to agree to compensation cuts of 10 percent, which would lower general-operating expenses by $37.7 million over the next five fiscal years. The city’s fiscal year begins July 1.
Five of the unions represent police and fire personnel. The city’s contribution to their pensions is 11.6 percent but is expected to rise to 28 percent in 2015 without any adjustments.