2 Ways A City Cut Pensions to Police & Fire

Which city cut its pensions for police and fire? Chattanooga

What cuts did Chattanooga make?

• Reduced cost of living adjustments by amending the guaranteed annual 3% cost of living rate to an average of 1.5%, depending on the level of benefits
• Increased the employee conributions while reducing the city contributions.

How was Chattanooga able to do this? 

• The mayor first formed a 18-member task force
• The task force recommended the cuts
• The cuts reduce the city’s $150 million unfunded pension liability
• The cuts also reducde the ” increasingly unsustainable city contribution to the pension fund”
• Increased employees’ pension contributions by nearly 40%
• Saving Chattanooga  more than $227 million over the next 24 years

Did pension recipients sue? Yes, but a federal district judge this week ruled in favor of Chattanooga by finding:

• the cost of living adjustment was not a vested right nor was it a contractual obligation
• the cost of living adjustments were separate and apart from vested rights listed in city ordinance.

Chattanooga Tiems Free Press | Chattanooga wins pension lawsuit filed by retired police officers, firefighters

Governing | Pension Cuts Win Federal Court Support in Chattanooga