Housing authority studies employee pension contributions
As negotiations continue for a new three-year contract between the Fayette County Housing Authority and its 24 maintenance union employees, the possibility of having those employees pay a portion of their pension benefit is being discussed. FCHA Chairwoman Angela M. Zimmerlink is advocating that employees should contribute a portion toward their pension benefit. Currently, the FCHA matches 15.3 percent of each employee’s annual salary toward his or her pension account. Zimmerlink said the practice is costing the authority more than a half-million dollars annually.
According to the FCHA budget, for FCHA Executive Director Thomas L. Harkless, who will make $118,588 in 2006, the practice means an additional $18,144 will be contributed toward his pension annually. The five department heads who make $56,246 will have $8,607 contributed toward their pension. The nine project managers, whose salaries $43,142 each, will have $46,600 contributed toward their pension. For the highest-paid maintenance employees, a $44,007 salary means an annual pension contribution of $6,733 by the FCHA.
Zimmerlink said when she voted on the last contract, she spoke out in favor of having the employees contribute a portion toward the pension. She said with the high vacancy rates the FCHA continues to have month after month, there is a possibility that less subsidies will come in.
“We have to look to the future and beyond,” Zimmerlink said, adding that the housing authority has to keep with its mission of making certain funding available to provide housing for low-income individuals. “We have to look at the bigger picture,” Zimmerlink added.
Zimmerlink said it stands to reason that if there are cuts in federal funding and there are fewer units being rented that there will be less work. “If you put all these things together, you may not have as much money and we could be locked into a three-year contract,” she said.
Zimmerlink said with cuts taking place in the federal government “left and right,” it is a signal for the FCHA to start tightening up. She said that with the upcoming change to project-based funding as mandated by the U.S. Department of Housing and Urban Development, the FCHA may face program cuts.
Board member Beverly Beal, the only other current board member when the last union contract was approved, said she also believes that employees should pay a portion of their pension plan. She said for someone like Harkless, who makes nearly $120,000 a year, the contribution is $18,000 annually. She said even paying 15.3 percent toward the lower-paid employees annually makes a difference. “You’re talking some big bucks. It’s still taxpayers’ money,” Beal said.
The authority previously took a step that would have required some employees to pay a portion of their annual pension contribution. In 1999, the authority voted to require new administrative employees to pay 5 percent of their salaries toward their authority pension, with the authority providing an additionally 10.3 percent match. However, after Harkless said the move would create a “two-tiered pension system” that might not pass IRS muster, the resolution was rescinded on a 4-1 vote, with Zimmerlink the only nay. At the time Zimmerlink pointed to a prior determination by solicitor John M. “Jack” Purcell that said the change was permissible.
Beal said she would like to see employees pay at least 3 percent, or even half, toward the pension amount. “I’m in favor of them paying something,” Beal said. “We have to start somewhere and change things. We want to keep our employees and the best way is to cut the best way we can.”
Zimmerlink said the union is seeking an average wage increase of 2.5 percent for the three-year contract. The expiring contract included wage increase of 3 percent the first year, 2.875 percent the second year, 2.75 percent that third year and 2.875 percent the fourth year.
According to the current union contract, employees receive time-and-a-half for working more than eight hours a day or 40 hours a week; are paid double time if they work seven consecutive days or a holiday; and have 12 paid holidays and three bereavement days annually.
Zimmerlink also noted that union, as well as nonunion administrative, FCHA employees don’t have to pay toward health care benefits and the housing authority is looking into establishing a co-pay for all employees. However, she said the union said if its members are required to pay a portion of their health insurance premium, it will no longer allow the authority’s non-union employees to participate in a group plan obtained under the Laborer’s District Council of Western Pennsylvania Fund.
Zimmerlink said the authority will have to weigh whether making that change would be worth paying the extra $200,000 a year the FCHA administration estimates it would cost to provide similar health care for nonunion employees.
For the non-maintenance employees to have the union employees pay for a portion of their health care.
Beal said she also would like to look into the possibility of having the employees pay a portion of the health care premiums.
Board member James V. Bitonti, who said he cannot vote on the contract because his son is a FCHA employee, said he believes as long as the contract comes in at an overall percentage of about 3.1 percent, it would be fair. He said it is important to not look at just the pension, but the overall contract. He said if employees would like to contribute toward the pension, “as long as it comes in at an economic percentage,” it would be a good contract.
Bitonti added that he really has no say on this contract. “I have no vote. I just have some opinions,” Bitonti said.
Harkless, who is a member of the negotiation team, earlier confirmed that the issue of changing the pension contribution was on the table, but it would be up to the board to decide on it.
Board members Nancy Sutton and William “Trip” Radcliffe could not be reached for comment.